FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 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 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _____ TO ______
Commission file number 1-4364
RYDER SYSTEM, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-0739250
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3600 N.W. 82 AVENUE, MIAMI, FLORIDA 33166 (305) 500-3726
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(Address of principal executive (Telephone number
offices including zip code) including area code)
Indicate by check mark whether the registrant (l) 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant computed by reference to the price at which the stock was sold as of
January 30, 1998, was $2,492,423,078. The number of shares of Ryder System, Inc.
Common Stock ($.50 par value) outstanding as of January 30, 1998, was
73,735,927.
DOCUMENTS INCORPORATED BY PART OF FORM 10-K INTO WHICH
REFERENCE INTO THIS REPORT DOCUMENT IS INCORPORATED
-------------------------- -----------------------------
Ryder System, Inc. 1997 Annual Parts I, II and IV
Report to Shareholders*
Ryder System, Inc. 1998 Proxy Part III
Statement
*The Ryder System, Inc. 1997 Annual Report to Shareholders is
incorporated herein only to the extent specifically stated.
[Cover page 1 of 3 pages]
<PAGE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS OF SECURITIES EXCHANGE ON WHICH REGISTERED
- --------------------------------- ----------------------------
Ryder System, Inc. Common Stock New York Stock Exchange
($.50 par value) and Preferred Pacific Stock Exchange
Share Purchase Rights Chicago Stock Exchange
(the Rights are not currently Berlin Stock Exchange
exercisable, transferable or
exchangeable apart from the
Common Stock)
Ryder System, Inc. 9% Series G Bonds, New York Stock Exchange
due May 15, 2016
Ryder System, Inc. 8 3/8% Series H Bonds, New York Stock Exchange
due February 15, 2017
Ryder System, Inc. 8 3/4% Series J Bonds, New York Stock Exchange
due March 15, 2017
Ryder System, Inc. 9 7/8% Series K Bonds, New York Stock Exchange
due May 15, 2017
Ryder System, Inc. 9 1/4% Series N Notes, None
due May 15, 2001
Ryder System, Inc. Medium-Term Notes None
Series 1, due from 9 months to
10 years from date of issue at
rate based on market rates at time
of issuance
Ryder System, Inc. Medium-Term Notes, None
Series 7, due from 9 months to
30 years from date of issue at
rate based on market rates at time
of issuance
Ryder System, Inc. Medium-Term Notes, None
Series 8, due from 9 months to
30 years from date of issue at
rate based on market rates at time
of issuance
Ryder System, Inc. Medium-Term Notes, None
Series 9, due 9 months or more from date of
issue at rate based on market rates at time
of issuance
[Cover page 2 of 3 pages]
<PAGE>
TITLE OF EACH CLASS OF SECURITIES EXCHANGE ON WHICH REGISTERED
- --------------------------------- ----------------------------
Ryder System, Inc. Medium-Term Notes, None
Series 10, due 9 months or more from date of
issue at rate based on market rates at time
of issuance
Ryder System, Inc. Medium-Term Notes, None
Series 11, due 9 months or more from date of
issue at rate based on market rates at time
of issuance
Ryder System, Inc. Medium-Term Notes, None
Series 12, due 9 months or more from date of
issue at rate based on market rates at time
of issuance
Ryder System, Inc. Medium-Term Notes, None
Series 13, due 9 months or more from date of
issue at rate based on market rates at time
of issuance
Ryder System, Inc. Medium-Term Notes, None
Series 14, due 9 months or more from date of
issue at rate based on market rates at time of
issuance
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT: None
[Cover page 3 of 3 pages]
<PAGE>
RYDER SYSTEM, INC.
Form 10-K Annual Report
TABLE OF CONTENTS
PAGE NO.
PART I
Item 1 Business......................................................5
Item 2 Properties....................................................9
Item 3 Legal Proceedings............................................10
Item 4 Submission of Matters to a Vote of Security Holders..........10
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters........................................11
Item 6 Selected Financial Data......................................11
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................11
Item 8 Financial Statements and Supplementary Data..................11
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure...................................11
PART III
Item 10 Directors and Executive Officers of the Registrant...........12
Item 11 Executive Compensation.......................................12
Item 12 Security Ownership of Certain Beneficial Owners and
Management.................................................12
Item 13 Certain Relationships and Related Transactions...............12
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K...................................................13
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PART I
ITEM 1. BUSINESS
GENERAL
Ryder System, Inc. (the "Company") was incorporated in Florida in 1955.
Through its subsidiaries, the Company engages primarily in the logistics and
transportation business with focus on: 1) integrated logistics, including
dedicated contract carriage, the management of carriers, and inventory
deployment; 2) transportation services, including full service leasing,
maintenance and short-term rental of trucks, tractors and trailers; and 3)
public transit management and operations, fleet management and maintenance
services, and student transportation services. At December 31, 1997, the
Company and its subsidiaries had a fleet of 162,665 vehicles and 42,342
employees.(1)
On September 30, 1997, the Company sold Ryder Automotive Carrier Services, Inc.
which constituted its automotive carrier division. The sale of the automotive
carrier division has been accounted for as a discontinued operation and,
accordingly, its operating results and cash flows are segregated and reported as
discontinued operations in the Company's consolidated financial statements.
Financial information about foreign and domestic operations is incorporated by
reference from the "Notes to Consolidated Financial Statements - Geographic
Information" on page 42 of the Ryder System, Inc. 1997 Annual Report to
Shareholders.
LOGISTICS AND TRANSPORTATION BUSINESS UNITS
INTEGRATED LOGISTICS
Ryder Integrated Logistics, Inc. ("Ryder Integrated Logistics") provides global
integrated logistics support of customers' entire supply chains, from in-bound
raw materials supply through finished goods distribution, including dedicated
contract carriage, the management of carriers, and inventory deployment through
822 locations in the U.S., Canada, United Kingdom, Germany, The Netherlands,
Poland, Mexico, Argentina and Brazil. Ryder Integrated Logistics utilizes
advanced information technology and teams frequently with strategic alliance and
joint venture partners. Services include varying combinations of logistics
system design, the provision of vehicles and equipment, maintenance, the
provision of drivers, warehouse management (including cross docking and
flow-through distribution), transportation management, vehicle dispatch, and
in-bound and out-bound just-in-time delivery. Logistics systems include
procurement and management of all modes of transportation, shuttles, interstate
long-haul operations, just-in-time service to assembly plants, and
factory-to-warehouse-to-retail facility service. These services are used in
major industry sectors including automotive, telecommunications, utilities,
health care, paper and paper packaging, chemical, electronic and office
equipment, news, food and beverage, housing, and general retail industries,
along with other industries and the federal sector. In 1997, Ryder Integrated
Logistics continued to expand its presence in the logistics market through
internal growth, increased emphasis on global account management, and initiation
of strategic alliances/joint ventures.
Besides integrated logistics, Ryder Integrated Logistics provides a wide variety
of highway transportation services in international markets outside the United
States and Canada, including full service leasing of trucks, tractors and
trailers, commercial truck rental, and contract truck maintenance. Ryder
Integrated Logistics is implementing a strategy for further growth in
international markets, providing global logistics solutions to multinational
customers.
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(1) This number does not include: (a) operating personnel of local transit
authorities managed by certain subsidiaries of the Company (in such
situations, generally the entire cost of compensation and benefits for such
personnel is passed through to the transit authority, which reinburses the
Company's subsidiaries); or (b) drivers obtained by certain subsidiaries
of the Company under driver leasing agreements.
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This strategy enables Ryder Integrated Logistics to take full advantage of, and
build upon, the expertise, market knowledge and infrastructure of strategic
alliance and joint venture partners, as well as its own expertise in providing
logistics solutions to businesses involved in the over-the-road transportation
of goods and to those who move goods around the world using any mode of
transportation. In that regard, in 1997, Ryder Integrated Logistics continued to
expand in the U.S. and Canada and to enhance its presence in Mexico, Argentina,
Brazil and Poland through internal growth, and also commenced assessing
opportunities in markets in other parts of the world. In so doing, Ryder
Integrated Logistics is always mindful of its need to mitigate risks, including
the minimization of asset and currency exposures.
FULL SERVICE LEASING, MAINTENANCE AND SHORT-TERM RENTAL OF TRUCKS, TRACTORS
AND TRAILERS
Ryder Truck Rental, Inc. which does business as Ryder Transportation Services
("Ryder Transportation Services") provides full service truck leasing to nearly
13,000 customers (ranging from large national enterprises to small companies),
with a fleet of 102,914 vehicles (including 14,742 vehicles leased to
affiliates), through 852 locations in 48 states, Puerto Rico, and 8 Canadian
provinces. Under a full service lease, Ryder Transportation Services provides
customers with vehicles, maintenance, supplies and related equipment necessary
for operation, while the customers furnish and supervise their own drivers, and
dispatch and exercise control over the vehicles. Additionally, Ryder
Transportation Services provides contract maintenance services to more than
1,250 customers, servicing 42,354 vehicles (including approximately 8,920
vehicles owned by affiliates) under maintenance contracts, and provides
short-term truck rental, which tends to be seasonal, to commercial customers to
supplement their fleets during peak business periods. A fleet of 34,371
vehicles, ranging from heavy-duty tractors and trailers to light-duty trucks, is
available for commercial short-term rental. In 1997, Ryder Transportation
Services focused on the expansion of its long-term contractual businesses such
as the full service leasing of trucks, tractors and trailers, and contract truck
maintenance, through internal growth. Additionally in 1997, Ryder Transportation
Services implemented new services for customers. Such new services include fleet
management, freight management and the Ryder Citicorp Finance Lease. By
expanding its vehicle financing options, Ryder Transportation Services gives
customers the flexibility to choose a full service lease or the combination of a
finance lease and contract maintenance for their vehicles.
PUBLIC TRANSIT MANAGEMENT, OPERATIONS AND FLEET MAINTENANCE SERVICES AND
STUDENT TRANSPORTATION SERVICES
The Company organized its public sector services in 1994 under a single
management structure to increase operating efficiencies and focus its marketing
efforts on serving the unique needs of the government market. The umbrella
management organization, Ryder Public Transportation Services provides a wide
array of transportation and maintenance services to the public sector through
two subsidiaries: Ryder Student Transportation Services, Inc. which operates
more than 9,567 school buses under long-term contract for 474 school districts
in 25 states; and Ryder/ATE, Inc., which operates or manages more than 4,981
buses under long-term contracts to 93 public transit agencies in 27 states. In
addition, Ryder/ATE, Inc.'s public fleet maintenance unit, Ryder/MLS, manages
and maintains over 30,000 pieces of equipment for public transit agencies,
cities, counties, colleges and utilities.
Ryder Public Transportation Services is either the largest or second largest
private contractor in the three primary markets it serves: student
transportation, public transit management and operations, and public fleet
management and maintenance for local governments and utilities. In each case,
public sector services that are operated by in-house governmental organizations
represent two-thirds or more of the market for such services and the biggest
opportunity for growth. Due to continuing cost pressures in the public sector
and Ryder's ability to provide the same services, typically at a 10 to 20
percent cost savings, an ongoing number of governmental organizations are
willing to outsource their transportation and fleet maintenance services to
Ryder Public Transportation Services. In 1997, Ryder Public Transportation
Services expanded through various methods, including acquisitions, adding more
than several hundred buses to its student transportation operations.
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DISPOSITION OF REVENUE EARNING EQUIPMENT
The Company's business units have historically disposed of used revenue earning
equipment at prices in excess of book value. The gains on the sale of revenue
earning equipment (reported as reductions in depreciation expense) were
approximately 11%, 27% and 20% of earnings from business units before interest
and taxes in 1997, 1996 and 1995, respectively. The extent to which gains will
be realized on future disposal of revenue earning equipment is dependent upon
various factors including the general state of the used vehicle market, the age
and condition of vehicles at the time of their disposal and depreciation methods
with respect to vehicles.
COMPETITION
As an alternative to using the Company's services, customers may choose to
provide similar services for themselves, or may choose to purchase similar or
alternative services from other third-party vendors.
In the U.S. and Canada, Ryder Integrated Logistics competes with companies
providing similar services on a national, regional and local level.
Additionally, this business is subject to potential competition in most of the
regions it serves from air cargo, shipping, railroads and motor carriers. On a
country-by-country basis and on a global basis, Ryder Integrated Logistics
competes with companies providing similar services in international markets
outside the United States and Canada. In the United Kingdom, the markets for
full service leasing of trucks, tractors and trailers, and dedicated contract
carriage services are well developed and competitive, similar to those in the
U.S. and Canada. Recent developments in Mexico following the approval of the
North American Free Trade Agreement (NAFTA), Germany's continued integration
into the European Community and the resulting deregulation, and Poland's
transformation to a market economy all create a growing opportunity for Ryder
Integrated Logistics to provide services in these new markets. Additionally,
recent developments in Argentina and Brazil, such as the expanded investment in
automotive manufacturing, create growing opportunities for Ryder International
to provide services in the southern cone of South America. Ryder Integrated
Logistics expects that competition with its services in these emerging markets
and in the global integrated logistics marketplace will develop. Competitive
factors include price, equipment, maintenance, geographical coverage, market
knowledge , expertise in logistics related technology, and overall performance
(e.g., timeliness, accuracy and flexibility). Value-added differentiation of
these service offerings across the full global supply chain will continue to be
Ryder Integrated Logistics' overriding strategy.
Ryder Transportation Services competes with companies providing similar services
on a national, regional and local level. Regional and local competitors may
sometimes provide services on a national level through their participation in
various cooperative programs and through their membership in various industry
associations. Competitive factors include price, equipment, maintenance and
geographical coverage. Ryder Transportation Services also competes, to an
extent, with a number of truck and trailer manufacturers who provide truck and
trailer leasing, extended warranty maintenance, rental and other transportation
services. Value-added differentiation of the full service truck leasing, truck
rental, and contract and non-contract truck maintenance service offerings has
been, and will continue to be, Ryder Transportation Services' emphasis.
Ryder Public Transportation Services competes with companies that provide
similar services in each segment of its operations, although no competitors
duplicate the complete array of services that Ryder Public Transportation
Services provides. In the student transportation market, one national competitor
is larger than Ryder Student Transportation Services, and the next three largest
competitors are less than one-half of its size. In addition, over 2,000 small
and regional companies compete with Ryder Public Transportation Services on a
limited, local market basis. In the public transit market, one national
competitor is approximately Ryder/ATE's size, and less than 100 small and
regional companies compete with Ryder Public Transportation Services on a
limited basis. In the public fleet management and maintenance market, a small
number of companies compete with Ryder/MLS, of which MLS is the largest in the
delivery of services to cities and counties. In all segments of its operations,
Ryder Public Transportation Services has been able to retain over 90% of its
contracts on an annual basis through a combination of high quality,
customer-focused services, and ongoing improvements in cost efficiency and
service innovation.
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OTHER DEVELOPMENTS AND FURTHER INFORMATION
Many federal, state and local laws designed to protect the environment, and
similar laws in some foreign jurisdictions, have varying degrees of impact on
the way the Company and its subsidiaries conduct their business operations,
primarily with regard to their use, storage and disposal of petroleum products
and various wastes associated with vehicle maintenance activities. Based on
information presently available, management believes that the ultimate
disposition of such matters, although potentially material to the Company's
results of operations in any one year, will not have a material adverse effect
on the Company's financial condition or liquidity.
For further discussion concerning the business of the Company and its
subsidiaries see the information referenced under Items 7 and 8 of this report.
EXECUTIVE OFFICERS OF THE REGISTRANT
All of the executive officers of the Company were elected or re-elected to their
present offices either at or subsequent to the meeting of the Board of Directors
held on May 2, 1997 in conjunction with the Company's 1997 Annual Meeting on the
same date. They all hold such offices, at the discretion of the Board of
Directors, until their removal, replacement or retirement.
NAME AGE POSITION
M. Anthony Burns 55 Chairman, President and
Chief Executive Officer
Dwight D. Denny 54 Executive Vice President -
Development
John H. Dorr 51 President - Ryder Public
Transportation Services, Inc.
James B. Griffin 43 President - Ryder Transportation
Services
Edwin A. Huston 59 Senior Executive Vice President -
Finance and Chief Financial
Officer
Thomas E. McKinnon 53 Executive Vice President - Human
Resources and Corporate Services
Vicki A. O'Meara 40 Executive Vice President and
General Counsel
Lisa A. Rickard 42 Senior Vice President -
Government Relations
George P. Scanlon 40 Vice President - Planning and
Controller
Edward M. Straw 59 President - Ryder Integrated
Logistics, Inc.
M. Anthony Burns has been Chairman of the Board since May 1985, Chief Executive
Officer since January 1983, and President and a director since December 1979.
Dwight D. Denny has been Executive Vice President - Development since January
1996, and was President - Ryder Commercial Leasing & Services from December
1992 to December 1995. Mr. Denny served Ryder Truck Rental,
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Inc. as Executive Vice President and General Manager - Commercial Leasing &
Services from June 1991 to December 1992. Mr. Denny served Ryder Truck Rental,
Inc. as Senior Vice President and General Manager - Eastern Area from March 1991
to June 1991, and Senior Vice President - Central Area from December 1990 to
March 1991. Mr. Denny previously served Ryder Truck Rental, Inc. as Region Vice
President in Tennessee from July 1985 to December 1990.
John H. Dorr has been President - Ryder Public Transportation Services, Inc.
since January 1997. Mr. Dorr served as Senior Vice President and General Manager
of Ryder Public Transportation Services since July 1993 and prior to that was
Vice President and General Manager of Ryder Student Transportation Services from
September 1990 to July 1993.
James B. Griffin has been President - Ryder Transportation Services (formerly
Commercial Leasing & Services) since January 1996, and was President - Ryder
Automotive Carrier Group, Inc. from February 1993 to December 1995. Mr. Griffin
served Ryder Truck Rental, Inc. as Vice President and General Manager -
Mid-South Region from December 1990 to February 1993. Mr. Griffin previously
served Ryder Truck Rental, Inc. as Region Vice President in Syracuse, New York
from April 1988 to December 1990.
Edwin A. Huston has been Senior Executive Vice President - Finance and Chief
Financial Officer since January 1987. Mr. Huston was Executive Vice President -
Finance from December 1979 to January 1987.
Thomas E. McKinnon has been Executive Vice President - Human Resources and
Corporate Services since February 1997. Mr. McKinnon served as Executive Vice
President - Human Resources from June 1995 until February 1997. Mr. McKinnon
previously served Unisys Corporation as Vice President - Human Resources from
August 1990 to June 1995.
Vicki A. O'Meara has been Executive Vice President and General Counsel since
June 1997. Previously, Ms. O'Meara was with the Chicago office of the law firm
of Jones Day Reavis & Pogue where she was a partner and chair of the firm's
worldwide Environmental, Health and Safety practice; and prior to that was
Assistant Attorney General, heading the Environmental and Natural Resources
Division of the U.S. Department of Justice.
Lisa A. Rickard has been Senior Vice President - Government Relations since
January 1997. Ms. Rickard served as Vice President - Federal Affairs from
January 1994 until January 1997. From June 1982 until December 1993, Ms. Rickard
was with the Washington law firm of Akin, Gump, Strauss, Hauer & Feld, LLP,
where she was a partner.
George P. Scanlon has been Vice President - Planning and Controller since
January 1997. Mr. Scanlon is the Company's principal accounting officer. Prior
to that, Mr. Scanlon served as Vice President - Corporate Planning since August
1996. Mr. Scanlon served as Group Director - Corporate Planning from October
1993 until August 1996 and Group Director - Audit Services from March 1991 until
October 1993.
Edward M. Straw has been President - Ryder Integrated Logistics, Inc. since June
1997. Previously, Mr. Straw served in the U.S. Navy for 35 years, where he rose
to the rank of Vice Admiral and spent four years as Director of the Defense
Logistics Agency, the lead Department of Defense agency for much of the U.S.
military's worldwide logistics support.
ITEM 2. PROPERTIES
The Company's property consists primarily of vehicles, vehicle maintenance and
repair facilities, and other real estate and improvements. Information regarding
vehicles is included in Item 1, which is incorporated herein by reference.
The Company has 1,912 locations in the United States, Canada and Puerto Rico;
398 of these facilities are owned and the remainder are leased. Such locations
generally include a maintenance facility, warehouse and/or administrative
offices. Through Ryder Integrated Logistics, the Company has 105 locations in
the United Kingdom, Germany, The Netherlands,
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Poland, Mexico, Argentina and Brazil; 21 of these facilities are owned and the
remainder are leased. Such locations generally include a maintenance facility,
warehouse and/or administrative offices.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various claims, lawsuits, and
administrative actions arising in the course of their businesses. Some involve
claims for substantial amounts of money and/or claims for punitive damages.
While any proceeding or litigation has an element of uncertainty, management
believes that the disposition of such matters, in the aggregate, will not have a
material impact on the consolidated financial condition, results of operation or
liquidity of the Company and its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the quarter
ended December 31, 1997.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The information required by Item 5 is incorporated by reference from page 43
("Common Stock Data") of the Ryder System, Inc. 1997 Annual Report to
Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is incorporated by reference on page 44 of
the Ryder System, Inc. 1997 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by Item 7 is incorporated by reference from pages 16
through 28 of the Ryder System, Inc. 1997 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 is incorporated by reference from pages 30
through 42 and page 43 ("Quarterly Data") of the Ryder System, Inc.
1997 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 regarding directors is incorporated by
reference from pages 4 through 8 of the Ryder System, Inc. 1998 Proxy Statement.
The information required by Item 10 regarding executive officers is set out in
Item 1 of Part I of this Form 10-K Annual Report.
Additional information required by Item 10 is incorporated by reference from
page 15 ("Section 16(a) Beneficial Ownership Reporting Compliance") of the Ryder
System, Inc. 1998 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from pages 9,
10 ("Compensation of Directors") and 19 through 22 of the Ryder System, Inc.
1998 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from pages 14
and 15 of the Ryder System, Inc. 1998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from page 10 of
the Ryder System, Inc. 1998 Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) 1. Financial Statements for Ryder System, Inc. and Consolidated
Subsidiaries:
Items A through E are incorporated by reference from pages 29 through 42
of the Ryder System, Inc. 1997 Annual Report to Shareholders.
A) Consolidated Statements of Operations for years ended December 31,
1997, 1996 and 1995.
B) Consolidated Balance Sheets as of December 31, 1997 and 1996.
C) Consolidated Statements of Cash Flows for years ended December 31,
1997, 1996 and 1995.
D) Notes to Consolidated Financial Statements.
E) Independent Auditors' Report.
2. Not applicable.
All other schedules and statements are omitted because they are not applicable
or not required or because the required information is included in the
consolidated financial statements or notes thereto.
Supplementary Financial Information consisting of selected quarterly financial
data is incorporated by reference from page 43 of the Ryder System, Inc. 1997
Annual Report to Shareholders.
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3. Exhibits:
The following exhibits are filed with this report or, where indicated,
incorporated by reference (Forms 10-K, 10-Q and 8-K referenced herein
have been filed under the Commission's file No. 1-4364). The Company will
provide a copy of the exhibits filed with this report at a nominal charge
to those parties requesting them.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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.
4.1 The Company hereby agrees, pursuant to paragraph (b)(4)(iii) of Item
601 of Regulation S-K, to furnish the Commission with a copy of any
instrument defining the rights of holders of long-term debt of the
Company, where such instrument has not been filed as an exhibit
hereto and the total amount of securities authorized thereunder does
not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis.
4.2(a) The Form of Indenture between Ryder System, Inc. and The Chase
Manhattan Bank (National Association) dated as of June 1, 1984,
filed with the Commission on November 19, 1985 as an exhibit to the
Company's Registration Statement on Form S-3 (No. 33-1632), is
incorporated by reference into this report.
4.2(b) The First Supplemental Indenture between Ryder System, Inc. and The
Chase Manhattan Bank (National Association) dated October 1, 1987,
previously filed with the Commission as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994, is
incorporated by reference into this report.
4.3 The Form of Indenture between Ryder System, Inc. and The Chase
Manhattan Bank (National Association) dated as of May 1, 1987, and
supplemented as of November 15, 1990 and June 24, 1992, filed with
the Commission on July 30, 1992 as an exhibit to the Company's
Registration Statement on Form S-3 (No. 33-50232), is incorporated
by reference into this report.
4.4 The Rights Agreement between Ryder System, Inc. and Boston
Equiserve, L.P., dated as of March 8, 1996, filed with the
Commission on April 3, 1996 as an exhibit to the Company's
Registration Statement on Form 8-A is incorporated by reference into
this report.
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10.1 The form of change of control severance agreement for executive
officers effective as of May 1, 1996, previously filed with the
Commission as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, is incorporated by reference
to this report.
10.2 The form of severance agreement for executive officers effective as
of May 1, 1996, previously filed with the Commission as an exhibit
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, is incorporated by reference to this report.
10.3(a) The Ryder System, Inc. 1997 Incentive Compensation Plan for
Headquarters Executive Management Levels MS 11 and Higher,
previously filed with the Commission as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, is
incorporated by reference to this report.
10.3(b) The Ryder System, Inc. 1998 Incentive Compensation Plan for
Headquarters Executive Management Levels MS 11 and Higher.
10.4(a) The Ryder System, Inc. 1980 Stock Incentive Plan, as amended and
restated as of August 15, 1996.
10.4(b) The form of Ryder System, Inc. 1980 Stock Incentive Plan, United
Kingdom Section, dated May 4, 1995, previously filed with the
Commission as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995, is incorporated by reference
into this report.
10.4(c) The form of Ryder System, Inc. 1980 Stock Incentive Plan, United
Kingdom Section, dated October 3, 1995, previously filed with the
Commission as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995, is incorporated by reference
into this report.
10.4(d) The Ryder System, Inc. 1995 Stock Incentive Plan, as amended and
restated as of August 15, 1996.
10.5(a) The Ryder System, Inc. Directors Stock Plan, as amended and restated
as of December 17, 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, is incorporated by reference into this
report.
10.5(b) The Ryder System, Inc. Directors Stock Award Plan dated as of May 2,
1997.
10.6(a) The Ryder System Benefit Restoration Plan, effective January 1,
1985, previously filed with the Commission as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31,
1992, is incorporated by reference into this report.
10.6(b) The First Amendment to the Ryder System Benefit Restoration Plan,
effective as of December 16, 1988, previously filed with the
Commission as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, is incorporated by reference
into this report.
15
<PAGE>
10.7 Distribution and Indemnity Agreement dated as of November 23, 1993
between Ryder System, Inc. and Aviall, Inc., 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, is incorporated by
reference into this report.
10.8 Tax Sharing Agreement dated as of November 23, 1993 between Ryder
System, Inc. and Aviall, Inc., 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, is incorporated by reference into this
report.
10.9(a) The Ryder System, Inc. Stock for Merit Increase Replacement Plan, as
amended and restated as of August 15, 1996.
10.9(b) The form of Ryder System, Inc. Non-Qualified Stock Option Agreement,
dated as of February 21, 1997.
10.9(c) The form of Combined Non-Qualified Stock Option and Limited Stock
Appreciation Right Agreement, dated October 1, 1997.
10.10 The Ryder System, Inc. Deferred Compensation Plan effective January
1, 1997, as amended and restated as of November 3, 1997.
10.11 Severance Agreement, dated as of June 30, 1997, between Ryder
Integrated Logistics, Inc. and Larry S. Mulkey.
10.12 The Asset and Stock Purchase Agreement by and between Ryder Truck
Rental, Inc. and RCTR Holdings, Inc. dated as of September 19, 1996,
filed with the Commission on September 20, 1996 as an exhibit to the
Company's report on Form 8-K, is incorporated by reference into this
report.
10.13 The Acquisition Agreement among Ryder System, Inc. and Allied
Holdings, Inc., AH Acquisition Corp., Canadian Acquisition Corp. and
Axis National Inc., dated as of August 20, 1997, filed with the
Commission on October 15, 1997 as an exhibit to the Company's report
on Form 8-K, is incorporated by reference into this report.
13.1 Portions of the Ryder System, Inc. 1997 Annual Report to
Shareholders. Those portions of the Ryder System, Inc. 1997 Annual
Report to Shareholders which are not incorporated by reference into
this report are furnished to the Commission solely for information
purposes and are not to be deemed "filed" as part of this report.
21.1 List of subsidiaries of the registrant, with the state or other
jurisdiction of incorporation or organization of each, and the name
under which each subsidiary does business.
23.1 Auditors' consent to incorporation by reference in certain
Registration Statements on Forms S-3 and S-8 of their reports on
consolidated financial statements and schedules of Ryder System,
Inc. and its subsidiaries.
16
<PAGE>
24.1 Manually executed powers of attorney for each of:
Joseph L. Dionne
Edward T. Foote II
John A. Georges
Vernon E. Jordan, Jr.
David T. Kearns
Lynn M. Martin
Paul J. Rizzo
Christine A. Varney
Alva O. Way
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
A report on Form 8-K, dated October 15, 1997, was filed by the registrant
announcing the completion of the sale of its Automotive Carrier Services
business unit. The report also included pro forma consolidated condensed
financial information for the registrant, after giving effect to the sale of
its Automotive Carrier Services business unit.
(c) Executive Compensation Plans and Arrangements:
Please refer to the description of Exhibits 10.1 through 10.13 set forth
under Item 14(a)3 of this report for a listing of all management contracts
and compensation plans and arrangements filed with this report pursuant to
Item 601(b)(10) of Regulation S-K.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 30, 1998 RYDER SYSTEM, INC.
By: /s/ M. ANTHONY BURNS
-----------------------------
M. Anthony Burns
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date: March 30, 1998 By: /s/ M. ANTHONY BURNS
------------------------------
M. Anthony Burns
Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
Date: March 30, 1998 By: /s/ EDWIN A. HUSTON
-------------------------------
Edwin A. Huston
Senior Executive Vice President -
Finance and Chief Financial Officer
(Principal Financial Officer)
Date: March 30, 1998 By: /s/ GEORGE P. SCANLON
-------------------------------
George P. Scanlon
Vice President - Planning and
Controller (Principal Accounting
Officer)
18
<PAGE>
Date: March 30, 1998 By: /s/ JOSEPH L. DIONNE *
------------------------------
Joseph L. Dionne
Director
Date: March 30, 1998 By: /s/ EDWARD T. FOOTE II *
--------------------------------
Edward T. Foote II
Director
Date: March 30, 1998 By: /s/ JOHN A. GEORGES *
----------------------------
John A. Georges
Director
Date: March 30, 1998 By: /s/ VERNON E. JORDAN, JR. *
----------------------------------
Vernon E. Jordan, Jr.
Director
Date: March 30, 1998 By: /s/ DAVID T. KEARNS *
---------------------------
David T. Kearns
Director
Date: March 30, 1998 By: /s/ LYNN M. MARTIN *
--------------------------
Lynn M. Martin
Director
Date: March 30, 1998 By: /s/ PAUL J. RIZZO *
------------------------
Paul J. Rizzo
Director
Date: March 30, 1998 By: /s/ CHRISTINE A. VARNEY *
------------------------------
Christine A. Varney
Director
Date: March 30, 1998 By: /s/ ALVA O. WAY *
--------------------
Alva O. Way
Director
*By: /s/ MARIA C. MATIAS
------------------------
Maria C. Matias
Attorney-in-Fact
19
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
10.3(b) The Ryder System, Inc. 1998 Incentive Compensation Plan for
Headquarters Executive Management Levels MS 11 and Higher.
10.4(a) The Ryder System, Inc. 1980 Stock Incentive Plan, as amended and
restated as of August 15, 1996.
10.4(d) The Ryder System, Inc. 1995 Stock Incentive Plan, as amended and
restated as of August 15, 1996.
10.5(b) The Ryder System, Inc. Board of Directors Stock Award Plan dated as
of May 2, 1997.
10.9(a) The Ryder System, Inc. Stock for Merit Increase Replacement Plan, as
amended and restated as of August 15, 1996.
10.9(b) The form of Ryder System, Inc. Non-Qualified Stock Option Agreement,
dated as of February 21, 1997.
10.9(c) The form of Ryder System, Inc. Combined Non-Qualified Stock Option
and Limited Stock Appreciation Right Agreement, dated October 1,
1997.
10.10 The Ryder System, Inc. Deferred Compensation Plan effective
January 1, 1997, as amended and restated as of November 3, 1997.
10.11 Severance Agreement, dated as of June 30, 1997, between Ryder
Integrated Logistics, Inc. and Larry S. Mulkey.
13.1 Portions of the Ryder System, Inc. 1997 Annual Report to
Shareholders. Those portions of the Ryder System, Inc. 1997 Annual
Report to Shareholders which are not incorporated by reference into
this report are furnished to the Commission solely for information
purposes and are not to be deemed "filed" as part of this report.
21.1 List of subsidiaries of the registrant, with the state or other
jurisdiction of incorporation or organization of each, and the name
under which each subsidiary does business.
23.1 Auditors' consent to incorporation by reference in certain
Registration Statements on Forms S-3 and S-8 of their reports on
consolidated financial statements and schedules of Ryder System,
Inc. and its subsidiaries.
24.1 Manually executed powers of attorney for each of:
Joseph L. Dionne
Edward T. Foote II
John A. Georges
Vernon E. Jordan, Jr.
David T. Kearns
Lynn M. Martin
Paul J. Rizzo
Christine A. Varney
Alva O. Way
27.1 Financial Data Schedule.
EXHIBIT 10.3(b)
================================================================================
RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 1
================================================================================
Supersedes 1997 Executive Management Incentive Compensation Plans
INTRODUCTION
The following material explains the operation and administration of the 1998
Incentive Compensation Plan (the "Plan") for Ryder System, Inc. ("RSI" or the
"Company") headquarters Officers and Directors whose positions are evaluated at
Management Level 11 (MS11) or higher and other members of the Company's
Executive Committee ("participants"). The Plan is intended to serve as a single,
comprehensive source of information that will explain your bonus for achieving
various levels of performance.
The Plan is based on the Economic Value Added ("EVA") performance measurement
system. EVA is a measurement tool that determines whether a business is earning
more than its true cost of capital by incorporating the cost of equity capital
as well as debt capital. EVA will assess financial performance and will also
serve as a management tool for setting goals, evaluating strategies, and
analyzing results.
EVA can be expressed in the following formula: EVA = NAT- AN EQUITY CHARGE
PERFORMANCE TARGETS
The Plan is intended to provide participants with competitive compensation for
achieving targeted performance. Target awards are expressed as a percentage of a
participant's base salary and will be declared when Target EVA improvement is
achieved.
Target EVA improvement is the level of EVA performance improvement required over
a one-year time frame whereby participants will receive a target bonus payout.
RSI's Target EVA for 1998 is $20 million higher than year-end 1997 EVA, or $45.6
MM.
TARGET BONUS OPPORTUNITY
Target Bonus Opportunity is expressed as a percentage of base salary for each
participant. The following table summarizes the Target Bonus Opportunity for
each participating management level:
TARGET BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
MANAGEMENT LEVEL TARGET BONUS OPPORTUNITY
- --------------------------------------------------------------------------------
Chief Executive Officer 85%
Management Levels 17 - 20; including Division Presidents 75%
Management Levels 14 - 16 70%
Management Level 13 40%
Management Levels 11 - 12 30%
- --------------------------------------------------------------------------------
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 2
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BONUS OPPORTUNITY
The Plan has uncapped bonus opportunity, both positive and negative. Bonus
opportunity will increase as EVA exceeds the expected level. Similarly, bonus
opportunity will decrease as EVA falls short of target. Participants in this
Plan will be subject to the Bonus Reserve which is discussed later in this
document.
BONUS PAYOUT MECHANISM
In 1998, 100% of the bonus calculation will be based on EVA performance. Actual
bonus award amounts will be distributed with 80% of the declared bonus based on
EVA improvement and the remaining 20% of the declared bonus based on performance
for pre-established Value Enhancement Measures ("VEMs") subject to the Bonus
Reserve discussed below. VEMs for 1998 will be 10% based on Ryder Transportation
Services ("RTS") Net Sales and 10% based on Ryder Integrated Logistics ("RIL")
Net Sales.
[GRAPHIC OMITTED]
The bonus calculation is based on EVA performance. Once the bonus calculation is
determined, bonuses will be distributed to participants based 80% on EVA and 20%
on the relative performance of VEMs.
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 3
================================================================================
VALUE ENHANCEMENT MEASURES
There will be two 1998 Value Enhancement Measure, each based on Net Sales. 10%
of the overall 1998 bonus payout will be based on RTS Net Sales (Full Service
Lease plus RPM) and 10% will be based on RIL Net Sales.
The goals for 1998 Net Sales levels are shown below:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
PERCENTAGE OF VEM AWARD
<S> <C> <C> <C> <C> <C>
0% 2.5% 5% 7.5% 10%
- ------------------------------------------------ ------------ ------------- ------------- ------------- -------------
RTS NET SALES ($ millions) $77 $82 $87 $92 $96
- ------------------------------------------------ ------------ ------------- ------------- ------------- -------------
--------------------------------------------------------------------
PERCENTAGE OF VEM AWARD
0% 2.5% 5% 7.5% 10%
- ------------------------------------------------ ------------ ------------- ------------- ------------- -------------
RIL NET SALES ($ millions) $150 $175 $200 $225 $250
- ------------------------------------------------ ------------ ------------- ------------- ------------- -------------
</TABLE>
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 4
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BONUS RESERVE
Participants in the Plan will be subject to a Bonus Reserve.
The Bonus Reserve promotes a long-term perspective for the Plan and aligns
participants with owners by simulating ownership. Sustained improvements are
rewarded and consistently exceeding EVA performance targets increases the Bonus
Reserve balance. The Bonus Reserve also makes managers accountable for
performance shortfalls since the Reserve can carry a negative balance if
performance is significantly lower than expected. The Bonus Reserve provides a
mechanism to smooth the impact of performance cycles.
The Bonus Declared in any year is added to the Bonus Reserve. The Bonus Reserve
will then pay participants up to their Target Bonus levels plus one-half of any
residual balance. The remaining one-half is carried forward and will be held in
the Bonus Reserve.
The Bonus Reserve is specifically identified with each individual and will
follow that individual through other positions within any business unit of the
Company. The Bonus Reserve balance will not exceed 3 times Target Bonus and any
residual balance above 3 times Target Bonus will be immediately paid out to the
participant.
The Bonus Reserve is illustrated below:
[GRAPHIC OMITTED]
The Bonus Reserve Balance, while linked to each Plan participant, is not
considered "earned" by that individual until performance is sustained over time.
The Bonus Reserve is designed to reward long-term performance, and participants
will receive one-half of any excess over target levels in any given year. The
remaining balance in the Bonus Reserve will be distributed in future years if
performance improvements are sustained, and will be used to pay up to Target
Bonus in years where performance falls short of target financial performance.
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 5
================================================================================
1998 PLAN SCALE - EVA
The following scale illustrates how the Plan will work. Noted are the points
where Target Bonus, two times Target Bonus, and zero bonus are achieved. Bonus
amounts are dependent on the multiple declared.
[GRAPHIC OMITTED]
Follow the steps on the following example to understand how your bonus is
calculated.
STEPS TO CALCULATE YOUR BONUS:
1. Calculate Variance between Actual and Target EVA
2. Calculate Bonus Multiple Contribution
3. Calculate Bonus Contribution
4. Calculate Financial Bonus Contribution
5. Calculate VEM Bonus Contribution
6. Calculate Total Bonus Declared
7. Calculate Bonus Reserve and Bonus Payment
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 6
================================================================================
To fully appreciate these steps, the following definitions describe key terms of
the Plan.
KEY TERMS:
TARGET EVA The level of EVA performance required to earn a
Target Bonus. For RSI, Target EVA for 1998 will be
year-end 1997 EVA plus $20 million or $45.6 MM.
BONUS INTERVAL The performance above Target EVA or the
performance below Target EVA that will cause a 2x
bonus contribution or a zero bonus contribution.
For RSI, the Bonus Interval will be $34 million.
With RSI 1998 Target EVA of $45.6 MM, a 2x bonus
multiple contribution will result if EVA of $79.6
MM is achieved. If actual EVA is $11.6 MM or less,
then a zero bonus will occur.
VEMS VEMs are important measures which impact how
bonuses will be paid out. For 1998, 80% of bonus
payments will be based on EVA and 20% will be
based on two VEMs, which are RTS Net Sales (10%)
and RIL Net Sales (10%).
VEM POTENTIAL 20% of your Bonus Contribution
BONUS
VEM AWARD The percent of your VEM Potential Bonus that you
have earned. This award % will be based on how
well RTS and RIL achieved Net Sales goals.
VEM BONUS
CONTRIBUTION Your VEM Potential Bonus x VEM Award
BONUS DECLARED The bonus dollars available for payment or reserve
after all declarations have been made.
AVAILABLE BALANCE The Bonus Declared plus the Beginning Bonus
Reserve Balance.
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 7
================================================================================
KEY TERMS (CONTINUED):
NAT The consolidated Net Earnings After Tax for the
bonus year, including appropriate accruals for all
incentive awards estimated to be payable for that
bonus year.
EQUITY CHARGE The average equity x the cost of equity determined
by Chief Financial Officer.
EXAMPLE:
The following is an example of how bonus calculations are determined using 1998
RSI Target EVA of $45.6 MM.
Assume your base salary is $100,000 and your Target Bonus is 30% of your salary,
or $30,000. 80% of your bonus is determined by EVA, and 20% determined by VEMs.
As you will recall, Target EVA for 1998 is $20 MM higher than 1997 Year-End EVA,
or $45.6 MM.
The EVA Bonus Interval ("Interval") is the EVA Improvement needed, over and
above Target, to declare a double bonus. It is also the shortfall from Target
that will cause a zero bonus being declared. The EVA Bonus Interval for 1998 is
$34 MM. Therefore:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Zero Bonus Contribution at: 1998 Target EVA - Interval = $45.6 MM - $34 MM= $11.6 MM
- ------------------------------------------------------------------------------------
or,
- ------------------------------------------------------------------------------------
Twice Target Bonus Contribution at: = 1998 Target EVA + Interval = $45.6 MM + $34 MM
= $79.6 MM
- ------------------------------------------------------------------------------------
</TABLE>
For any level of EVA, determine the difference between Actual EVA and Target
EVA, and divide that difference by the Interval. Add that number to 1.0 to
calculate the Bonus Contribution.
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 8
================================================================================
STEP ONE: CALCULATE VARIANCE FROM TARGET EVA:
Year-end EVA in 1997 was $25.6 MM. As stated previously, 1998 Target EVA is
$45.6 MM. First, determine the difference between 1998 Actual EVA and 1998
Target EVA. This is your Variance from Target EVA. If year-end 1998 EVA is $50.6
MM, the calculation is shown below.
1998 Actual EVA $50.6 MM
- 1998 Target EVA -$45.6 MM
--------------- --------
= Variance from Target EVA $ 5 MM
STEP TWO: CALCULATE BONUS MULTIPLE CONTRIBUTION:
In 1998, RSI's EVA is $5 MM above Target EVA. From above, this should be divided
by the EVA Bonus Interval to determine the amount of Bonus to be added to
Target.
Variance from Target EVA $ 5 MM
/ EVA Bonus Interval /$ 34 MM
------------------------ -------
= Bonus Above Target 0.15x
Next, add the Bonus Above Target to the Target Bonus of 1.0 to determine your
Bonus Contribution.
Bonus Above Target 0.15x
+ Target Bonus Multiple +1.00
--------------------- ----
= Bonus Multiple Contribution 1.15x
STEP THREE: CALCULATE BONUS CONTRIBUTION:
The Bonus Multiple Contribution is then multiplied by your Target Bonus to
determine your Bonus Contribution in dollars.
Bonus Multiple Contribution 1.15x
x Target Bonus x$30,000
--------------------------- -------
= Bonus Contribution $34,500
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 9
================================================================================
STEP FOUR: CALCULATE FINANCIAL BONUS CONTRIBUTION:
For all RSI participants, 20% of your Bonus Contribution will be determined by
VEMs. The other 80% is determined by EVA.
Bonus Contribution $34,500
x EVA Component x 80%
------------------ -------
= Financial Bonus Contribution $27,600
STEP FIVE: CALCULATE VALUE ENHANCEMENT MEASURES BONUS CONTRIBUTION:
To determine the amount subject to VEMs (your VEM Potential Bonus) multiply your
Bonus Contribution by 20%.
Bonus Contribution $34,500
x Value Enhancement Measures x 20%
-------------------------- -------
= VEM Potential Bonus $6,900
Your VEM Potential Bonus is then modified by VEM performance. If you achieved
90% performance on your VEM, this calculation is illustrated below.
VEM Potential Bonus $6,900
x VEM Award x 90%
-------------------- ------
= VEM Bonus Contribution $6,210
STEP SIX: CALCULATE TOTAL BONUS DECLARED:
Add the VEM Bonus Contribution to the Financial Bonus Contribution to get the
Total Bonus Declared, which is then subject to the Bonus Reserve.
VEM Bonus Contribution $6,210
+ Financial Bonus Contribution + $27,600
---------------------------- -------
= Total Bonus Declared $33,810
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 10
================================================================================
STEP SEVEN: CALCULATE THE BONUS RESERVE AND BONUS PAYMENT:
The Bonus Reserve will only apply to those in MS 11 and above. Before any Bonus
can be paid, the Bonus Declared must flow through the Bonus Reserve. First, the
Bonus Declared is added to the Beginning Reserve Balance to determine how much
is available to be paid. If in 1998, your Beginning Reserve Balance is $2,000,
Bonus Declared (1998) $33,810
+ Beginning Reserve Balance + $2,000
------------------------- -------
= Available Balance $35,800
Second, the reserve then pays out up to Target Bonus; if less than Target Bonus
is in the Bonus Reserve, the entire Bonus Reserve is paid out.
Available Balance $35,810
- (Up to) Target Bonus - $30,000
------------------- -------
= Residual Balance $5,810
Next, ONE-HALF OF ANY RESIDUAL BALANCE is paid out...
Residual Balance $5,810
x 1/2 x 1/2
---------------- -------
= Additional Payment $2,905
Target Bonus $30,000
+ Additional Payment + $2,900
------------------ ------
= Total Bonus Payment $32,905
...with the remaining one-half staying in the reserve.
Residual Balance $5,810
- Additional Payment - $2,905
------------------ ------
= Ending Reserve Balance $2,905
The Ending Reserve Balance from 1998 then becomes the Beginning Reserve Balance
for 1999.
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 11
================================================================================
BASE SALARY CALCULATION
For the purpose of bonus calculations, base salary is defined as the average
annual rate of pay for the calendar year, excluding all other compensation paid
to the employee during the year, e.g. bonus, commissions, car allowance,
employee benefits, moving expenses, any imputed income and amounts attributable
to any of the Company's stock plans.
The average annual rate of pay for a participant whose base salary changes
within the bonus year is calculated below. Salaried employees are paid
semi-monthly, each check representing 1/24 of the annual base salary. Daily pay
for a salaried employee is calculated by dividing the annual salary by 360
working days per year.
BASE SALARY CALCULATION EXAMPLE
Average annual rate of pay would be calculated as follows for a
participant who begins a bonus year with a base salary of
$100,000, then effective June 1 receives an increase to a base
salary of $104,000:
JANUARY 1 THROUGH MAY 31 OF BONUS YEAR:
5 MONTHS X 30 DAYS PER MONTH = 150 = .417 x $100,000/yr. = $ 41,700
---------------------------- ---
360 days 360
JUNE 1 THROUGH DECEMBER 31 OF BONUS YEAR:
360 - 150 = 210 = .583 x $104,000/yr. = $ 60,667
--------- --- --------
360 days 360
AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $ 102,367
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 12
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PLAN RULES
The following rules apply to Plan participants. The Company reserves the right
to alter, modify, change or terminate any of the provisions described below at
any time.
/bullet/ ELIGIBILITY: Employees whose positions are designated on page 1 and
who are employed in good standing at the time bonus payments are made
are eligible to participate in this Plan. Individuals who have
agreements which specifically provide for incentive compensation
other than that which is provided in this Plan or who are
participants in any other incentive compensation plan of RSI, its
subsidiaries or affiliates are not eligible to participate in this
Plan.
Employees who are newly hired, promoted or transferred into or out of
eligible positions and those who move from one eligibility level to
another will receive pro-rata bonus awards based on the average
annual rate of pay and Bonus Opportunity in eligible positions,
provided they are employed in good standing at the time bonus awards
are distributed.
/bullet/ PROMOTION: A participant who is promoted during the bonus year will
receive a pro-rata bonus declaration based on the average annual rate
of pay and bonus opportunity in the eligible positions. The
participant will receive a pro-rata bonus based on the appropriate
Plan for his/her management level, position and the portion of time
spent in each position during the year.
/bullet/ WORKERS' COMPENSATION OR LEAVE OF ABSENCE ("LOA"): A participant who
leaves the payroll due to a workers' compensation leave or LOA will
receive no additional bonus declarations while off the payroll, but
will be eligible to receive a pro-rata bonus for the year in which
they leave the payroll. Such payment may be made in a lump sum or
over time at the discretion of the Company, the Board of Directors or
the Compensation Committee of the Board of Directors.
/bullet/ TRANSFERS: A participant who transfers from one business unit to
another will have their Bonus Reserve transferred with them. At the
time of transfer the award will be prorated with respect to the year
in which the transfer occurs.
/bullet/ DEMOTION: If an individual is demoted from level 11 or above to level
10 or below, the person will no longer be subject to the Bonus
Reserve mechanism. The reserve balance will be paid out one half over
each of the next 2 years in accordance with the other provisions of
this Plan.
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 13
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PLAN RULES (CONTINUED)
/bullet/ TERMINATION (DISMISSAL): Participants leaving the Company under any
conditions other than those outlined in the Eligibility or Change of
Control sections of this Plan are not eligible for bonus awards for
the bonus year in which they leave, nor are they eligible for awards
for the preceding bonus year, if such awards have not yet been
distributed. A participant who is terminated and who has a positive
Reserve Balance will forfeit any Reserve Balance. Unless terminated
for cause, the individual may be eligible for severance which may
include a provision for bonus.
/bullet/ RESIGNATIONS: Except as provided otherwise in this Plan, voluntary
termination of employment with the Company will result in forfeiture
of any unpaid declared bonuses and of the balance in a participant's
Bonus Reserve.
/bullet/ RETIREMENT OR PERMANENT DISABILITY RETIREMENT: A participant who
retires or takes disability retirement from the Company will receive
full payment of their Reserve Balance and a pro-rata bonus for the
year in which they retire. Such payment will be made in a lump sum or
over time at the Company's discretion.
/bullet/ DEATH: The estate of a participant who dies while in the employ of
the Company will receive full payment of their Reserve Balance and a
pro-rata bonus for the year in which they die. Such payment will be
made at the regular time for making bonus payments in respect to the
year of such death, and will be paid to the designated beneficiary or
estate.
/bullet/ SALE OF BUSINESS: If a business is sold, the reserve will be paid out
to participants of the sold business.
/bullet/ NO GUARANTEE: Participation provides no guarantee that a bonus will
be paid. The success of the Company, its business units and
individual participants as measured by the achievement of EVA will
determine the extent to which participants will be entitled to
receive bonuses hereunder; provided, however, all bonuses are subject
to the sole discretion of the Board of Directors or the Compensation
Committee of the Board of Directors of the Company.
/bullet/ EXCLUSION CRITERIA: Participation in the Plan is not a right, but a
privilege subject to annual review by the Company. RSI retains the
right to withhold payment from any participant who violates Company
principles or policies, or the rules contained in this Plan.
/bullet/ NEGATIVE BALANCES: The entire Bonus Declared is credited to each
participant's personal Bonus Reserve account, with the Target Bonus
and one half of any net positive balance paid out. Residual amounts,
including negative balances, are reserved forward to be credited or
debited against future declared bonus amounts. Negative balances will
not be held as claims against participants who leave the payroll for
any reason.
<PAGE>
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RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 14
================================================================================
ADMINISTRATION
The Chairman, President, and Chief Executive Officer of RSI will administer this
Plan, except for bonus awards to the Chief Executive Officer, which will be
administered by the Compensation Committee of the Board of Directors of RSI.
BONUS YEAR
The bonus year is defined as the calendar year in which bonus awards are earned.
BONUS ELIGIBILITY ON CHANGE OF CONTROL
Notwithstanding anything in this Plan to the contrary, in the event of a Change
of Control of the Company (as defined and adopted by the Board of Directors on
August 18, 1995), the funds necessary to pay incentive awards, including the
Reserve Balances, will be placed in a trust administered by an outside financial
institution.
The amount of each participant's incentive award will be determined in
accordance with the provisions of the Plan by a "Big 6" accounting firm chosen
by the Company. The Company will be responsible for all legal fees and expenses
which participants may reasonably incur in enforcing their rights under the Plan
in the event of a Change of Control of the Company.
Should a Change of Control occur during 1998, participants will receive
instructions regarding the collection of incentive awards.
BONUS PAYMENT
Shortly after the end of the calendar year and after considering the
recommendations of the Administrator of the Plan, the Compensation Committee of
the Board of Directors or the Board of Directors of RSI will, in its sole
discretion, determine the participants, if any, who will receive bonus awards
and the amounts of such awards. Bonus award payments will be distributed to
eligible participants following such Board or Committee approval and subsequent
to certification of consolidated financial statements by an independent auditor.
BONUS FUNDING
A maximum of 13% of consolidated RSI NBT may be allotted by RSI throughout the
bonus year as an accrual to fund all awards under all incentive compensation
plans of the Company, including this Plan, as well as any incentive or bonus
payments resulting from employment commitments or agreements.
<PAGE>
================================================================================
RYDER RSI HEADQUARTERS
EXECUTIVE MANAGEMENT
1998 INCENTIVE COMPENSATION PLAN LEVELS MS 11 AND HIGHER
PAGE 15
================================================================================
BONUS FUNDING (CONTINUED)
Bonus payout maximums are limited by the lower of the total declared bonus
provided under this Plan, the amount of the accrual at the time of any bonus
payment, or the maximum funding limitation. Should the funding limitation or
accrual not provide for bonus allotments under this Plan, proration will be
performed at the discretion of the Chairman, President and Chief Executive
Officer of RSI. Unused funds may not be carried forward for subsequent bonus
years.
DISCRETIONARY AWARDS
With the approval of the Board of Directors or the Compensation Committee of the
Board of Directors of RSI, the Chairman, President, and Chief Executive Officer
of RSI has the authority to grant discretionary bonus awards for exemplary
performance to non-participants or to enhance the awards of participants.
Discretionary awards are not subject to the funding limitations of this Plan.
While it is common to grant discretionary awards at the same time as regular
awards, it may be appropriate, on occasion, to recognize an employee off-cycle
due to extremely unusual performance. Off-cycle discretionary awards must be
approved by the Chairman, President and Chief Executive Officer of RSI.
The total of all discretionary awards for participants under all RSI incentive
compensation plans, including this Plan as well as awards granted off-cycle, may
not exceed $500,000 per year.
AMENDMENTS
The Board of Directors of RSI, or the Compensation Committee, reviews RSI's, its
subsidiaries' and affiliates' incentive compensation plans annually to ensure
equitability both within the Company, and in relation to current economic
conditions.
THE BOARD OF DIRECTORS, OR THE COMPENSATION COMMITTEE, RESERVES THE RIGHT TO
AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME.
EXHIBIT 10.4(a)
RYDER SYSTEM, INC. 1980 STOCK INCENTIVE PLAN
(As amended on August 15, 1996)
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Purpose..................................................... 1
2. Definitions................................................. 1
3. Shares of Stock Subject to the Plan......................... 5
4. Participation............................................... 5
5. Administration.............................................. 6
6. Awards...................................................... 6
7. Stock Options............................................... 6
8. Stock Appreciation Rights.................................. 10
9. Limited SARs............................................... 11
10. Performance Units.......................................... 12
11. Restricted Stock Rights.................................... 14
12. Dilution and Other Adjustments............................. 15
13. Substitute Options......................................... 15
14. Miscellaneous Provisions................................... 15
15. Indemnification of the Committee........................... 17
16. Compliance with Law........................................ 17
17. Amendment of the Plan...................................... 17
18. Effective Date and Term of the Plan........................ 17
-i-
<PAGE>
RYDER SYSTEM, INC. 1980 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of this Plan is to enable the Company to recruit and
retain those key executives most responsible for the Company's continued success
and progress, and by offering comparable incentives, to compete with other
organizations in attracting, motivating and retaining such executives, thereby
furthering the interests of the Company and its shareholders by giving such
executives a greater personal stake in and commitment to the Company and its
future growth and prosperity.
2. DEFINITIONS. For the purpose of the Plan:
(a) The term "Award" shall mean and include any Stock Option, SAR, Limited
SAR, Performance Unit or Restricted Stock Right granted under this Plan.
(b) During the three (3) year period following a Change of Control, the term
"cause" as used in Section 7 and Section 14(a) of this Plan with respect to any
Stock Option shall mean (i) an act or acts of fraud, misappropriation, or
embezzlement on the Grantee's part which result in or are intended to result in
his personal enrichment at the expense of the Company, (ii) conviction of a
felony, (iii) conviction of a misdemeanor involving moral turpitude, or (iv)
willful failure to report to work for more than thirty (30) continuous days not
supported by a licensed physician's statement, all as determined only by a
majority of the Incumbent Board.
(c) A "Change of Control" shall be deemed to have occurred if:
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) (a "Person") becomes the beneficial owner, directly or indirectly,
of twenty percent (20%) or more of the combined voting power of RSI's
outstanding voting securities ordinarily having the right to vote for the
election of directors of RSI; provided, however, that for purposes of this
subparagraph (i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition by any employee benefit plan or plans (or related
trust) of RSI and its subsidiaries and affiliates or (B) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B) and
(C) of subparagraph (iii) of this Section 2(c); or
(ii) the individuals who, as of August 18, 1995, constituted the Board
of Directors of RSI (the "Board" generally and as of August 18, 1995 the
"Incumbent Board") cease for any reason to constitute at least two-thirds (2/3)
of the Board, provided that any person becoming a director subsequent to August
18, 1995 whose election, or nomination for election, was approved by a vote of
the persons comprising at least two-thirds (2/3) of the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act)
shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board; or
<PAGE>
(iii) there is a reorganization, merger or consolidation of RSI (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of RSI's outstanding Common Stock and
outstanding voting securities ordinarily having the right to vote for the
election of directors of RSI immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities ordinarily having the
right to vote for the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns RSI or all
or substantially all of RSI's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of RSI's outstanding Common
Stock and outstanding voting securities ordinarily having the right to vote for
the election of directors of RSI, as the case may be, (B) no Person (excluding
any corporation resulting from such Business Combination or any employee benefit
plan or plans (or related trust) of RSI or such corporation resulting from such
Business Combination and their subsidiaries and affiliates) beneficially owns,
directly or indirectly, 20% or more of the combined voting power of the then
outstanding voting securities of the corporation resulting from such Business
Combination and (C) at least two-thirds (2/3) of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(iv) there is a liquidation or dissolution of RSI approved by the
shareholders; or
(v) there is a sale of all or substantially all of the assets of RSI.
If a Change of Control occurs and if a Grantee's employment is terminated prior
to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Grantee that such termination of employment (A) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change of Control or (B) otherwise arose in connection with or in anticipation
of a Change of Control, a Change of Control shall be deemed to have
retroactively occurred on the date immediately prior to the date of such
termination of employment.
(d) The term "Code" shall mean the Internal Revenue Code of 1986 as it may
be amended from time to time.
(e) The term "Committee" shall mean the Compensation Committee of the Board
of Directors of RSI constituted as provided in Section 5 of the Plan.
(f) The term "Common Stock" shall mean the common stock of RSI as from time
to time constituted.
(g) The term "Company" shall mean RSI and its Subsidiaries.
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<PAGE>
(h) The term "Disability" shall mean total physical or mental disability of
a Grantee as determined by the Committee upon the basis of such evidence as the
Committee in its discretion deems necessary and appropriate.
(i) The term "Employee" shall mean a full-time salaried employee of RSI or
any Subsidiary (which term shall include salaried officers).
(j) The term "Fair Market Value" shall mean, with respect to the Common
Stock, the mean between the highest and lowest sale price for shares as reported
by the composite transaction reporting system for securities listed on the New
York Stock Exchange on the date as of which such determination is being made or
on the most recently preceding date on which there was such a sale.
(k) The term "Grantee" shall mean an Employee who is selected by the
Committee to receive an Award under the Plan and in the case of a deceased
Employee shall mean the beneficiary of the Employee.
(l) The term "Incentive Stock Option" shall mean a Stock Option granted
under this Plan or a previously granted Stock Option that is redesignated by the
Committee as an Incentive Stock Option which is intended to constitute an
incentive stock option within the meaning of Section 422(b) of the Code.
(m) The term "Limited SAR" shall mean a Limited Stock Appreciation Right
granted by the Committee pursuant to Section 9 of the Plan.
(n) The terms "1966 Stock Option Plan" and "1966 Option" shall mean,
respectively, the Ryder System Stock Option Plan adopted in 1966, as amended,
and any stock option granted thereunder.
(o) The term "Non-employee Director" shall mean any person who qualifies as
a disinterested person as defined in Rule 16b-3, as promulgated under the 1934
Act, or any successor definition.
(p) The term "Non-qualified Stock Option" shall mean a Stock Option granted
under this Plan which is not intended to qualify under Section 422(b) of the
Code.
(q) The term "Offer" shall mean any tender offer or exchange offer for
Shares, other than one made by the Company, including all amendments and
extensions of any such Offer.
(r) The term "Offer Price per Share" shall have the meaning set forth in
Section 9(c) of the Plan.
(s) The term "Option" shall mean any stock option granted under this Plan or
the 1966 Stock Option Plan.
3
<PAGE>
(t) The term "Performance Goals" shall have the meaning set forth in Section
10(c) of the Plan.
(u) The term "Performance Period" shall have the meaning set forth in
Section 10(d) of the Plan.
(v) The term "Performance Units" shall mean Performance Units granted by the
Committee pursuant to Section 10 of the Plan.
(w) The term "Plan" shall mean the Ryder System, Inc. 1980 Stock Incentive
Plan as the same shall be amended.
(x) The term "Price" shall mean, upon the occurrence of a Change of Control,
the excess of the highest of:
(i) the highest closing price of the Common Stock reported by the
composite transaction reporting system for securities listed on the New York
Stock Exchange within the sixty (60) days preceding the date of exercise;
(ii) the highest price per share of Common Stock included in a filing
made by any Person on any Schedule 13D pursuant to Section 13(d) of the 1934 Act
as paid within the sixty (60) days prior to the date of such report; and
(iii) the value of the consideration to be received by the holders of
Common Stock, expressed on a per share basis, in any transaction referred to in
subparagraph (iii), (iv) or (v) of Section 2(c), with all noncash consideration
being valued in good faith by the Incumbent Board;
over the purchase price per Share at which the related Option is exercisable as
applicable, except that Incentive Stock Options and, if and to the extent
required in order for the related Option to be treated as an Incentive Stock
Option, SARs and Limited SARs granted with respect to Incentive Stock Options,
are limited to the spread between the Fair Market Value of Common Stock on the
date of exercise and the purchase price per Share at which the related Option is
exercisable.
(y) The term "Restricted Period" shall have the meaning set forth in Section
11(a) of the Plan.
(z) The term "RSI" shall mean Ryder System, Inc.
(aa) The term "Restricted Stock Rights" shall mean a Restricted Stock Right
granted by the Committee pursuant to Section 11 of the Plan.
4
<PAGE>
(bb) The term "Retirement" shall mean retirement under the provisions of
the various retirement plans of the Company (whichever is appropriate to a
particular Grantee) as then in effect, or in the absence of any such retirement
plan being applicable, as determined by the Committee.
(cc) The term "SAR" shall mean a Stock Appreciation Right granted by the
Committee pursuant to the provisions of Section 8 of the Plan.
(dd) The term "Shares" shall mean shares of the Common Stock and any shares
of stock or other securities received as a result of the adjustment provided for
in Section 12 of the Plan.
(ee) The term "Spread" with respect to a SAR shall have the meaning set
forth in Section 8(b) of the Plan, and with respect to a Limited SAR, the
meanings set forth in Sections 9(c) and 9(d) of the Plan.
(ff) The term "Stock Option" shall mean any stock option granted under this
Plan.
(gg) The term "Subsidiary" shall mean any corporation, other than RSI, or
other form of business entity more than fifty percent (50%) of the voting
interest of which is owned or controlled, directly or indirectly, by RSI and
which the Committee designates for participation in the Plan.
(hh) The term "Termination Date" shall mean the date that a Grantee ceases
to be employed by RSI or any Subsidiary for any reason.
(ii) The term "Year" shall mean a calendar year.
3. SHARES OF STOCK SUBJECT TO THE PLAN.
(a) Shares issued pursuant to this Plan may be either authorized but
unissued or reacquired Shares held in the treasury.
(b) In the event any Stock Option or Restricted Stock Right expires or
terminates unexercised, the number of Shares subject to such Stock Option or
Restricted Stock Right shall again become available for issuance under the Plan,
subject to the provisions of Sections 7(a), 8(a), 9(b) and 10(i) of this Plan.
(c) Effective October 22, 1993, no Grantee was eligible to receive any Stock
Option or series of Stock Options covering, in the aggregate, more than 300,000
Shares from the Shares which were available for issuance pursuant to future
grants on that date.
4. PARTICIPATION. Awards under the Plan shall be limited to key executive
Employees selected from time to time by the Committee.
5
<PAGE>
5. ADMINISTRATION. The Plan shall be administered by the Committee which shall
consist of two or more members of the Board of Directors, each of whom shall be
a Non-employee Director. All members of the Committee shall be "outside
directors" as defined or interpreted for purposes of Section 162(m) of the Code.
The Committee shall have plenary authority, subject to the express provisions of
the Plan, to (i) select Grantees; (ii) establish and adjust Performance Goals
and Performance Periods for Performance Units; (iii) determine the nature,
amount, time and manner of payment of Awards made under the Plan, and the terms
and conditions applicable thereto; (iv) interpret the Plan; (v) prescribe, amend
and rescind rules and regulations relating to the Plan; (vi) determine whether
and to what extent Stock Options previously granted under the Plan shall be
redesignated as Incentive Stock Options pursuant to the provisions of Section
251(c) of the Economic Recovery Tax Act of 1981 and the regulations issued
thereunder, and in this connection, amend any Stock Option Agreement or make or
authorize any reports or elections or take any other action to the extent
necessary to implement the redesignation of any Stock Option as an Incentive
Stock Option, provided that any redesignation of a previously granted Stock
Option as an Incentive Stock Option shall not be effective unless and until
consented to by the Grantee; and (vii) make all other determinations deemed
necessary or advisable for the administration of the Plan. The Committee's
determination on the foregoing matters shall be conclusive. A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all members of the Committee without a meeting, shall be the acts of the
Committee.
6. AWARDS. Subject to the provisions of Section 3 of the Plan, the Committee
shall determine Awards taking into consideration, as it deems appropriate, the
responsibility level and performance of each Grantee. The Committee may grant
the following types of Awards: Stock Options pursuant to Section 7 hereof, SARs
pursuant to Section 8 hereof, Limited SARs pursuant to Section 9 hereof,
Performance Units pursuant to Section 10 hereof and Restricted Stock Rights
pursuant to Section 11 hereof. Unless otherwise determined by the Committee, a
Grantee may not be granted in any Year both (i) a Restricted Stock Right and
(ii) a Stock Option, SAR, Limited SAR or Performance Unit.
7. STOCK OPTIONS.
(a) The Committee from time to time may grant Stock Options either alone or
in conjunction with and related to SARs, Limited SARs and/or Performance Units
to key executive Employees selected by the Committee as being eligible therefor.
The Stock Options may be of two types, Incentive Stock Options and Non-qualified
Stock Options. Each Stock Option shall cover such number of Shares and shall be
on such other terms and conditions not inconsistent with this Plan as the
Committee may determine and shall be evidenced by a Stock Option Agreement
setting forth such terms and conditions executed by the Company and the Grantee.
The Committee shall determine the number of Shares subject to each Stock Option.
The number of Shares subject to an outstanding Stock Option shall be reduced on
a one for one basis to the extent that any related SAR, Limited SAR
6
<PAGE>
or Performance Unit is exercised and such Shares shall not again become
available for issuance pursuant to the Plan.
In the case of Stock Options, the aggregate Fair Market Value
(determined as of the date of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an Employee during
any Year under the Plan or any other plan of the Company shall not exceed
$100,000. To the extent, if any, that the Fair Market Value of such Common Stock
with respect to which Incentive Stock Options are exercisable exceeds $100,000,
such Incentive Stock Options shall be treated as separate Non-qualified Stock
Options. For purposes of the two immediately preceding sentences of this
subparagraph (a), Stock Options shall be taken into account in the order in
which they were granted.
(b) Unless the Committee shall determine otherwise, each Stock Option may be
exercised only if the Grantee has been continuously employed by RSI or any
Subsidiary for a period of at least one (1) year commencing on the date the
Stock Option is granted; provided, however, that this provision shall not apply
in the event of a Change of Control.
(c) Each Stock Option shall be for such term (but, in no event, for greater
than ten years) and shall be exercisable in such installments as shall be
determined by the Committee at the time of grant of the Stock Option.
The Committee may, at any time, provide for the acceleration of
installments or any part thereof.
(d) The price per Share at which Shares may be purchased upon the exercise
of a Stock Option shall be determined by the Committee on the grant of the Stock
Option but such price shall not be less than one hundred percent (100%) of the
Fair Market Value on the date of grant of the Stock Option. If a Grantee owns
(or is deemed to own under applicable provisions of the Code and rules and
regulations promulgated thereunder) more than ten percent (10%) of the combined
voting power of all classes of the stock of the Company and a Stock Option
granted to such Grantee is intended to qualify as an Incentive Stock Option, the
Incentive Stock Option price shall be no less than one hundred and ten percent
(110%) of the Fair Market Value of the Common Stock on the date the Incentive
Stock Option is granted and the term of such Incentive Stock Option shall be no
more than five years.
(e) Except as provided in Paragraphs (h) and (l) of this Section 7, no Stock
Option may be exercised unless the Grantee, at the time of exercise, is an
Employee and has continuously been an Employee of RSI or any Subsidiary since
the grant of such Stock Option. A Grantee shall not be deemed to have terminated
his period of continuous employ with RSI or any Subsidiary if he leaves the
employ of RSI or any Subsidiary for immediate reemployment with RSI or any
Subsidiary.
(f) To exercise a Stock Option, the Grantee shall (i) give written notice to
the Company in form satisfactory to the Committee indicating the number of
Shares which he elects to purchase, (ii)
7
<PAGE>
deliver to the Company payment of the full purchase price of the Shares being
purchased (A) in cash or a certified or bank cashier's check payable to the
order of the Company, or (B) if the Grantee elects with the approval of the
Committee, in Shares of the Common Stock having a Fair Market Value on the date
of exercise equal to the purchase price, or a combination of the foregoing
having an aggregate Fair Market Value equal to such purchase price, and (iii)
deliver to the Secretary of the Company such written representations, warranties
and covenants as the Company may require under Section 16(a) of this Plan.
(g) Upon proper exercise of a Stock Option, the Grantee shall be treated for
all purposes as the registered owner of the Shares as to which the Stock Option
has been exercised as of the close of business on the date of exercise.
(h) Notwithstanding any other provision of the Plan, unless otherwise
determined by the Committee prior to a Change of Control, in the event of a
Change of Control, each Stock Option not previously exercised or expired under
the terms of the Plan shall become immediately exercisable in full and shall
remain exercisable to the full extent of the Shares available thereunder,
regardless of any installment provisions applicable thereto, for the remainder
of its term, unless Section 14(a) of the Plan applies or the Grantee has been
terminated for cause, in which case the Stock Options shall automatically
terminate as of the Incumbent Board's determination pursuant to Section 14(a) or
the Grantee's Termination Date, as appropriate.
(i) If the Committee so determines prior to or during the thirty (30) day
period following the occurrence of a Change of Control, Grantees of Stock
Options not otherwise exercised or expired under the terms of the Plan as to
which no SARs or Limited SARs are then exercisable may, in lieu of exercising,
require RSI to purchase for cash all such Stock Options or portions thereof for
a period of sixty (60) days following the occurrence of a Change of Control at
the Price specified in Section 2(x).
(j) Any determination made by the Committee pursuant to Section 7(h) or 7(i)
may be made as to all eligible Stock Options or only as to certain of such Stock
Options specified by the Committee. Once made, any determination by the
Committee pursuant to Section 7(h) or 7(i) shall be irrevocable.
(k) The Company intends that Section 7(i) shall comply with the requirements
of Rule 16b-3 under the 1934 Act (the "Rule") during the term of this Plan.
Should any provision of Section 7(i) not be necessary to comply with the
requirements of the Rule, or should any additional provisions be necessary for
Section 7(i) to comply with the requirements of the Rule, the Committee may
amend this Plan or any Stock Option agreement to add to or modify the provisions
thereof accordingly.
(l) Notwithstanding any of the provisions of this Section 7, a Stock Option
shall in all cases terminate and not be exercisable after the expiration of the
term of the Stock Option established by the Committee. Except as provided in
Section 7(h), Stock Options shall be exercisable after the
8
<PAGE>
Grantee ceases to be employed by RSI or any Subsidiary as follows, unless
otherwise determined by the Committee:
(i) In the event that a Grantee ceases to be employed by RSI or any
Subsidiary by reason of Disability or Retirement, (A) any Non-qualified Stock
Option not previously exercised or expired shall continue to vest and be
exercisable during the three (3) year period following the Grantee's Termination
Date, and to the extent it is exercisable at the expiration of such three (3)
year period, it shall continue to be exercisable by such Grantee or such
Grantee's legal representatives, heirs or legatees for the term of such
Non-qualified Stock Option, and (B) any Incentive Stock Option shall, to the
extent it was exercisable on the Termination Date, continue to be exercisable by
such Grantee or such Grantee's legal representatives, heirs or legatees for the
term of such Incentive Stock Option; provided, however, that in order to qualify
for the special tax treatment afforded by Section 421 of the Code, Incentive
Stock Options must be exercised within the three (3) month period commencing on
the Termination Date (the exercise period shall be one (1) year in the case of
termination by reason of disability, within the meaning of Section 422(e)(3) of
the Code). Incentive Stock Options not exercised within such three (3) month
period shall be treated as Non-qualified Stock Options.
(ii) In the event that a Grantee ceases to be employed by RSI or any
Subsidiary by reason of death, any Stock Option shall, to the extent it was
exercisable on the Termination Date, continue to be exercisable by such
Grantee's legal representatives, heirs or legatees for the term of such Stock
Option.
(iii) Except as otherwise provided in subparagraph (i) or (ii) above,
in the event that a Grantee ceases to be employed by RSI or any Subsidiary for
any reason other than termination for cause, any Stock Option shall, to the
extent it was exercisable on the Termination Date, continue to be exercisable
for a period of three (3) months commencing on the Termination Date and shall
terminate at the expiration of such period; provided, however, that in the event
of the death of the Grantee during such three (3) month period, such Stock
Option shall, to the extent it was exercisable on the Termination Date, be
exercisable by the Grantee's personal representatives, heirs or legatees for a
period of one (1) year commencing on the date of the Grantee's death and shall
terminate at the expiration of such period.
(iv) Except as otherwise provided in subparagraphs (i), (ii) and (iii)
above, a Stock Option shall automatically terminate as of the Termination Date,
provided that if a Grantee's employment is interrupted by reason of Disability
or a leave of absence (as determined by the Committee) the Committee may permit
the exercise of some or all of the Stock Options granted on such terms and for
such period of time as it shall determine.
9
<PAGE>
8. STOCK APPRECIATION RIGHTS.
(a) The Committee shall have authority in its discretion to grant a SAR to
any Grantee of a Stock Option with respect to all or some of the Shares covered
by such Stock Option. Each SAR shall be on such terms and conditions not
inconsistent with this Plan as the Committee may determine and shall be
evidenced by a SAR Agreement setting forth such terms and conditions executed by
the Company and the holder of the SAR. A SAR may be granted either at the time
of grant of a Stock Option or at any time thereafter during its term. A SAR may
be granted to a Grantee irrespective of whether such Grantee has a Limited SAR.
Each SAR shall be exercisable only if and to the extent that the related Stock
Option is exercisable. Upon the exercise of a SAR, the related Stock Option
shall cease to be exercisable to the extent of the Shares with respect to which
such SAR is exercised and shall be considered to have been exercised to that
extent for purposes of determining the number of Shares available for the grant
of further Awards pursuant to this Plan. Upon the exercise or termination of a
Stock Option, the SAR related to such Stock Option shall terminate to the extent
of the Shares with respect to which such Stock Option was exercised or
terminated.
(b) The term "Spread" as used in this Section 8 shall mean, with respect to
the exercise of any SAR, an amount equal to the product computed by multiplying
(i) the excess of (A) the Fair Market Value per Share on the date such SAR is
exercised over (B) the purchase price per Share at which the related Stock
Option is exercisable by (ii) the number of Shares with respect to which such
SAR is being exercised, provided, however, that the Committee may at the grant
of any SAR limit the maximum amount of the Spread to be paid upon the exercise
thereof.
(c) Only if and to the extent required in order for the related Stock Option
to be treated as an Incentive Stock Option, a SAR may be exercised only when
there is a positive Spread, that is, when the Fair Market Value per Share
exceeds the purchase price per Share at which the related Stock Option is
exercisable. Upon the exercise of a SAR, the Committee shall pay to the Grantee
exercising the SAR an amount equivalent to the Spread. The Committee shall have
the sole and absolute discretion to determine whether payment for such SAR will
be made in cash, Shares or a combination of cash and Shares, provided, that any
Shares used for payment shall be valued at their Fair Market Value on the date
of the exercise of the SAR.
(d) The Company intends that this Section 8 shall comply with the
requirements of the Rule during the term of this Plan. Should any provision of
this Section 8 not be necessary to comply with the requirements of the Rule or
should any additional provisions be necessary for this Section 8 to comply with
the requirements of the Rule, the Committee may amend this Plan or any Award
agreement to add to or modify the provisions thereof accordingly.
(e) To exercise a SAR, the Grantee shall (i) give written notice to the
Company in form satisfactory to the Committee specifying the number of Shares
with respect to which such holder is exercising the SAR and (ii) deliver to the
Company such written representations, warranties and covenants as the Company
may require under Section 16(a) of this Plan.
10
<PAGE>
(f) A person exercising a SAR shall not be treated as having become the
registered owner of any Shares issued on such exercise until such Shares are
issued.
(g) The exercise of a SAR shall reduce the number of Shares subject to the
related Stock Option on a one for one basis.
9. LIMITED SARS.
(a) The Committee shall have authority in its discretion to grant a Limited
SAR to the holder of any Stock Option or any 1966 Option, with respect to all or
some of the Shares covered by such Option; provided, however, that in the case
of Incentive Stock Options, the Committee may grant Limited SARs only if and to
the extent that the grant of such Limited SARs is consistent with the treatment
of the Stock Option as an Incentive Stock Option. Each Limited SAR shall be on
such terms and conditions not inconsistent with this Plan as the Committee may
determine and shall be evidenced by a Limited SAR Agreement setting forth such
terms and conditions executed by the Company and the holder of the Limited SAR.
A Limited SAR may be granted to the holder of a 1966 Option at any time during
its term and may be granted either at the time of grant of a Stock Option or at
any time thereafter during its term. A Limited SAR may be granted to a Grantee
irrespective of whether such Grantee has a SAR.
(b) Limited SARs may be exercised only during the sixty (60) day period
commencing after the occurrence of a Change of Control.
Each Limited SAR shall be exercisable only if and to the extent that
the related Option is exercisable. Upon the exercise of a Limited SAR, the
related Stock Option or 1966 Option shall cease to be exercisable to the extent
of the Shares with respect to which such Limited SAR is exercised, and the Stock
Option and 1966 Option shall be considered to have been exercised to that extent
for purposes of determining the number of Shares available for the grant of
further Awards pursuant to this Plan and the 1966 Stock Option Plan,
respectively. Upon the exercise or termination of an Option, the Limited SAR
with respect to such Option shall terminate to the extent of the Shares with
respect to which the Option was exercised or terminated.
(c) For any Limited SAR, the term "Spread" as used in this Section 9 shall
mean an amount equal to the product computed by multiplying (A) the Price
specified in Section 2(x) by (B) the number of Shares with respect to which such
Limited SAR is being exercised.
(d) Only if and to the extent required in order for the related Stock Option
to be treated as an Incentive Stock Option, a Limited SAR may be exercised only
when there is a positive Spread, that is, when the Fair Market value per Share
exceeds the purchase price per Share at which the related Stock Option is
exercisable. Upon the exercise of a Limited SAR, the holder thereof shall
receive an amount in cash equal to the Spread.
11
<PAGE>
(e) Notwithstanding any other provision of this Plan, no SAR or Performance
Unit may be exercised with respect to any Stock Option at a time when any
Limited SAR with respect to such Stock Option held by the Grantee of such SAR or
Performance Unit may be exercised.
(f) The Company intends that this Section 9 shall comply with the
requirements of the Rule during the term of this Plan. Should any provision of
this Section 9 not be necessary to comply with the requirements of the Rule, or
should any additional provisions be necessary for this Section 9 to comply with
the requirements of the Rule, the Committee may amend this Plan or any Award
agreement to add to or modify the provisions thereof accordingly.
(g) To exercise a Limited SAR, the holder shall give written notice to the
Company in form satisfactory to the Committee specifying the number of Shares
with respect to which he is exercising the Limited SAR.
(h) The exercise of a Limited SAR shall reduce on a one for one basis the
number of Shares subject to the related Stock Option or 1966 Option.
10. PERFORMANCE UNITS.
(a) In conjunction with the granting of Stock Options under this Plan, the
Committee may grant Performance Units relating to such Stock Options; provided,
however, that in the case of Incentive Stock Options, the Committee may grant
Performance Units only if and to the extent that the grant of such Performance
Units is consistent with the treatment of the Stock Option as an Incentive Stock
Option. Each grant of Performance Units shall cover such number of Shares and
shall be on such other terms and conditions not inconsistent with this Plan as
the Committee may determine and shall be evidenced by a Performance Unit
Agreement setting forth such terms and conditions executed by the Company and
the Grantee of the Performance Units. The number of Performance Units granted
shall be equal to a specified number of Shares subject to the related Stock
Options. The Committee shall value such Units to the extent that Performance
Goals are achieved, provided, however, that in no event shall the value per
Performance Unit exceed one hundred and fifty percent (150%) of the purchase
price per Share at which the related Stock Option is exercisable.
(b) The Committee shall have full and final authority to establish
Performance Goals for each Performance Period on the basis of such criteria, and
the attainment of such objectives, as the Committee may from time to time
determine. In setting Performance Goals, the Committee may take into
consideration such matters which it deems relevant and such financial and other
criteria including but not limited to projected cumulative compounded rate of
growth in earnings per share and average return on equity. During any
Performance Period, the Committee shall have the authority to adjust Performance
Goals for the Performance Period as it deems equitable in recognition of
extraordinary or nonrecurring events experienced by the Company during the
Performance Period including, but not limited to, changes in applicable
accounting rules or principles or changes in the Company's
12
<PAGE>
methods of accounting during the Performance Period or significant changes in
tax laws or regulations which affect the financial results of the Company.
(c) The term "Performance Goals" as used in this Section 10 shall mean the
performance objectives established by the Committee for the Company for a
Performance Period for the purpose of determining if, as well as the extent to
which, a Performance Unit shall be earned.
(d) The term "Performance Period" as used in this Section 10 shall mean the
period of time selected by the Committee (which period shall be not more than
five nor less than three years) commencing on January 1 of the Year in which the
grant of Performance Units is made, during which the performance of the Company
is measured for the purpose of determining the extent to which Performance Units
have been earned.
(e) Performance Units shall be earned to the extent that Performance Goals
and other conditions established in accordance with Paragraph (b) of this
Section 10 are met. The Company shall promptly notify each Grantee of the extent
to which Performance Units have been earned by such Grantee. A Performance Unit
may be exercised only during the period following such notice and prior to
expiration of the related option. Performance Units which have been earned shall
be paid after exercise by the Grantee pursuant to Paragraph (h) of this Section
10. The Committee shall have the sole and absolute discretion to determine
whether payment for such Performance Unit will be made in cash, Shares or a
combination of cash and Shares, provided that any Shares used for payment shall
be valued at their Fair Market Value on the date of the exercise of the
Performance Unit.
(f) Unless otherwise determined by the Committee, in the event that a
Grantee of Performance Units ceases to be employed by RSI or any Subsidiary
during the term of the related Stock Option, the Performance Units held by him
shall be exercisable only to the extent the related Stock Option is exercisable
and shall be forfeited to the extent that the related Stock Option was not
exercisable on the Termination Date.
(g) The Company intends that this Section 10 shall comply with the
requirements of Section 16(b) of the 1934 Act and the rules thereunder, as from
time to time in effect, including the Rule. Should any provision of this Section
10 not be necessary to comply with the requirements of said Section 16(b) and
the rules thereunder or should any additional provision be necessary for this
Section 10 to comply with the requirements of Section 16(b) and the rules
thereunder, the Committee may amend this Plan or any Award agreement to add to
or modify the provisions thereof accordingly.
(h) To exercise Performance Units, the Grantee shall give written notice to
the Company in form satisfactory to the Committee addressed to the Secretary of
the Company specifying the number of Shares with respect to which he is
exercising Performance Units.
(i) The exercise of Performance Units shall reduce on a one for one basis
the number of Shares subject to the related Stock Option.
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<PAGE>
11. RESTRICTED STOCK RIGHTS.
(a) The Committee from time to time may grant Restricted Stock Rights to key
executive Employees selected by the Committee as being eligible therefor, which
would entitle a Grantee to receive a stated number of Shares subject to
forfeiture of such Rights if such Grantee failed to remain continuously in the
employ of RSI or any Subsidiary for the period stipulated by the Committee (the
"Restricted Period").
(b) Restricted Stock Rights shall be subject to the following restrictions
and limitations:
(i) The Restricted Stock Rights may not be sold, assigned, transferred,
pledged, hypothecated, or otherwise disposed of;
(ii) Except as otherwise provided in Paragraph (d) of this Section 11,
the Restricted Stock Rights and the Shares subject to such Restricted Stock
Rights shall be forfeited and all rights of a Grantee to such Restricted Stock
Rights and Shares shall terminate without any payment of consideration by the
Company if the Grantee fails to remain continuously as an Employee of RSI or any
Subsidiary for the Restricted Period. A Grantee shall not be deemed to have
terminated his period of continuous employment with RSI or any Subsidiary if he
leaves the employ of RSI or any Subsidiary for immediate reemployment with RSI
or any Subsidiary.
(c) The Grantee of Restricted Stock Rights shall not be entitled to any of
the rights of a holder of the Common Stock with respect to the Shares subject to
such Restricted Stock Rights prior to the issuance of such Shares pursuant to
the Plan. During the Restricted Period, for each Share subject to a Restricted
Stock Right, the Company will pay the holder an amount in cash equal to the cash
dividend declared on a Share during the Restricted Period on or about the date
the Company pays such dividend to the stockholders of record.
(d) In the event that the employment of a Grantee terminates by reason of
death, Disability or Retirement, such Grantee shall be entitled to receive the
number of Shares subject to the Restricted Stock Right multiplied by a fraction
(x) the numerator of which shall be the number of days between the date of grant
of such Restricted Stock Right and the date of such termination of employment,
and (y) the denominator of which shall be the number of days in the Restricted
Period, provided, however, that any fractional Share shall be cancelled. If a
Grantee's employment is interrupted by reason of Disability or a leave of
absence (as determined by the Committee), then the Committee may permit the
delivery of the Shares subject to the Restricted Stock Right in such amounts as
the Committee may determine.
(e) Notwithstanding Paragraphs (a) and (b) of this Section 11, unless
otherwise determined by the Committee prior to the occurrence of a Change of
Control, in the event of a Change of Control all restrictions on Restricted
Stock shall expire and all Shares subject to Restricted Stock Rights shall be
issued to the Grantees. Additionally, the Committee may, at any time, provide
for the acceleration of the Restricted Period and of the issuance of all or part
of the Shares subject to Restricted Stock
14
<PAGE>
Rights. Any determination made by the Committee pursuant to this Section 11(e)
may be made as to all Restricted Stock Rights or only as to certain Restricted
Stock Rights specified by the Committee. Once made, any determination by the
Committee pursuant to this Section 11(e) shall be irrevocable.
(f) When a Grantee shall be entitled to receive Shares pursuant to a
Restricted Stock Right, the Company shall issue the appropriate number of Shares
registered in the name of the Grantee.
12. DILUTION AND OTHER ADJUSTMENTS. If there shall be any change in the Shares
subject to the Plan or any Award granted under the Plan, as a result of merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure, adjustments may be made by the
Committee, as it may deem appropriate, in the aggregate number and kind of
Shares subject to the Plan or to any outstanding Award, and in the terms and
provisions of this Plan and any Awards granted hereunder, in order to reflect,
on an equitable basis, any such change in the Shares contemplated by this
Section 12. Any adjustment made by the Committee pursuant to this Section 12
shall be conclusive and binding upon the Grantee, the Company and any other
related person.
13. SUBSTITUTE OPTIONS. Incentive and/or Non-qualified Stock Options may be
granted under this Plan from time to time in substitution for either incentive
or non-qualified stock options or both held by employees of other corporations
who are about to become employees of the Company as the result of a merger,
consolidation or reorganization of the employing corporation with the Company,
or the acquisition by the Company of the assets of the employing corporation, or
the acquisition by the Company of stock of the employing corporation as the
result of which it becomes a Subsidiary of the Company. The terms and conditions
of the Stock Options so granted may vary from the terms and conditions set forth
in this Plan to such extent as the Committee at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted, but, in the event that the
option for which a substitute Stock Option is being granted is an incentive
stock option, no variation shall adversely affect the status of any substitute
Stock Option as an incentive stock option under the Code.
14. MISCELLANEOUS PROVISIONS.
(a) Notwithstanding any other provision of the Plan, no Stock Option, SAR,
Limited SAR or Restricted Stock Right granted hereunder may be exercised nor
shall any payment in respect of any Performance Unit granted hereunder be made
and all rights of the Grantee thereof, or of the Grantee's legal
representatives, heirs or legatees, shall be forfeited if, prior to the time of
such exercise or payment, the Committee (or in the event of a Change of Control,
the Incumbent Board) determines that the Grantee has (i) used for profit or
disclosed confidential information or trade secrets of the Company to
unauthorized persons, or (ii) breached any contract with, or violated any legal
obligation
15
<PAGE>
to, the Company, or (iii) engaged in any other activity which would constitute
grounds for termination for cause of the Grantee by the Company. The Committee
(or the Incumbent Board) shall give a Grantee written notice of such
determination prior to making any such forfeiture. The Committee (or the
Incumbent Board) may waive the conditions of this Paragraph in full or in part
if, in its sole judgment, such waiver will have no substantial adverse effect
upon the Company. The determination of the Committee (or the Incumbent Board) as
to the occurrence of any of the events specified above and to the forfeiture, if
any, shall be conclusive and binding upon the Grantee, the Company and any other
related person.
(b) The Grantee of an Award shall have no rights as a stockholder with
respect thereto, except as otherwise expressly provided in the Plan, unless and
until certificates for Shares are issued.
(c) No Award or any rights or interests therein shall be assignable or
transferable by the Grantee except by will or the laws of descent and
distribution. During the lifetime of the Grantee, an Award shall be exercisable
only by the Grantee or the Grantee's guardian or legal representative.
(d) The Company shall have the right to deduct from all Awards granted
hereunder to be distributed in cash any Federal, state, local or foreign taxes
required by law to be withheld with respect to such cash payments. In the case
of Awards to be distributed in Shares, the holder or other person receiving such
Common Stock shall be required, as a condition of such distribution, either to
pay to the Company at the time of distribution thereof the amount of any such
taxes which the Company is required to withhold with respect to such Shares or
to have the number of the Shares, valued at their Fair Market Value on the date
of distribution, to be distributed reduced by an amount equal to the value of
such taxes required to be withheld.
(e) No Employee shall have any claim or right to be granted an Award under
the Plan, nor having been selected as a Grantee for one Year, any right to be a
Grantee in any other Year. Neither the Plan nor any action taken hereunder shall
be construed as giving any Grantee any right to be retained in the employ of RSI
or any Subsidiary, and the Company expressly reserves its right at any time to
dismiss any Grantee with or without cause.
(f) The costs and expense of administering the Plan shall be borne by the
Company and not charged to any Award nor to any Grantee.
(g) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under the Plan, and payment of Awards
shall be subordinate to the claims of the Company's general creditors.
(h) Whenever used in the Plan, the masculine gender shall include the
feminine or neuter wherever necessary or appropriate and vice versa and the
singular shall include the plural and vice versa.
16
<PAGE>
15. INDEMNIFICATION OF THE COMMITTEE. Service on the Committee shall constitute
service as a director of the Company and members of the Committee shall be
entitled to indemnification, advancement of expenses and reimbursement as
directors of the Company pursuant to its Articles of Incorporation, bylaws,
resolutions of the Board of Directors of RSI or otherwise.
16. COMPLIANCE WITH LAW.
(a) Each Grantee, to permit the Company to comply with the Securities Act of
1933, as amended (the "1933 Act"), and any applicable blue sky or state
securities laws, shall represent in writing to the Company at the time of the
grant of an Award and at the time of the issuance of any Shares thereunder that
such Grantee does not contemplate and shall not make any transfer of any Shares
to be acquired under an Award except in compliance with the 1933 Act and such
Grantee shall enter into such agreements and make such other representations as,
in the opinion of counsel to the Company, shall be sufficient to enable the
Company legally to issue the Shares without registration thereof under the 1933
Act. Certificates representing Shares to be acquired under Awards shall bear
legends as counsel for the Company may indicate are necessary or appropriate to
accomplish the purposes of this Section 16.
(b) If at any time the Committee shall determine that the listing,
registration or qualification of the Shares subject to any Award upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body is necessary or desirable as a
condition of, or in connection with, the granting of or issuance of Shares under
such Award, such Shares shall not be issued unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.
17. AMENDMENT OF THE PLAN. The Committee may at any time (i) terminate this Plan
or (ii) modify or amend this Plan in any respect, except that without
shareholder approval the Committee may not (A) materially increase the benefits
accruing to Grantees under the Plan if and to the extent required to maintain
the qualification of the Plan under the Rule, (B) materially increase the number
of securities which may be issued under the Plan, or (C) materially modify the
requirements as to eligibility for participation in the Plan. The termination or
any modification or amendment of this Plan shall not, without the consent of any
Grantee involved, adversely affect his rights under an Award previously granted
to him.
18. EFFECTIVE DATE AND TERM OF THE PLAN.
(a) This Plan originally became effective for the fiscal year commenced
January 1, 1980. The Plan was approved on May 2, 1980, by the holders of a
majority of the then outstanding Shares of the Company. The Plan as then amended
was most recently approved by the holders of a majority of the outstanding
Shares of the Company on May 7, 1993.
17
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(b) Unless previously terminated in accordance with Section 17 of this Plan,
this Plan shall terminate on the close of business on May 1, 2000, after which
no Awards shall be granted under this Plan. Such termination shall not affect
any Awards granted prior to such termination.
18
EXHIBIT 10.4(d)
RYDER SYSTEM, INC. 1995 STOCK INCENTIVE PLAN
(As amended on August 15, 1996)
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Purpose.................................................... 1
2. Definitions................................................ 1
3. Shares of Stock Subject to the Plan........................ 5
4. Participation.............................................. 5
5. Administration............................................. 5
6. Awards..................................................... 6
7. Stock Options.............................................. 6
8. Stock Appreciation Rights.................................. 9
9. Limited SARs............................................... 10
10. Performance Units.......................................... 12
11. Restricted Stock Rights.................................... 13
12. Dilution and Other Adjustments............................. 14
13. Substitute Options......................................... 15
14. Miscellaneous Provisions................................... 15
15. Indemnification of the Committee........................... 16
16. Compliance with Law........................................ 16
17. Amendment of the Plan...................................... 17
18. Effective Date and Term of the Plan........................ 17
-i-
<PAGE>
RYDER SYSTEM, INC. 1995 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of this Plan is to enable the Company to recruit and
retain those key executives most responsible for the Company's continued success
and progress, and by offering comparable incentives, to compete with other
organizations in attracting, motivating and retaining such executives, thereby
furthering the interests of the Company and its shareholders by giving such
executives a greater personal stake in and commitment to the Company and its
future growth and prosperity.
2. DEFINITIONS. For the purpose of this Plan:
(a) The term "Award" shall mean and include any Stock Option, SAR, Limited
SAR, Performance Unit or Restricted Stock Right granted under this Plan.
(b) During the three (3) year period following a Change of Control, the term
"cause" as used in Section 7 and Section 14(a) of this Plan with respect to any
Stock Option shall mean (i) an act or acts of fraud, misappropriation or
embezzlement on the Grantee's part which result in or are intended to result in
his personal enrichment at the expense of the Company, (ii) conviction of a
felony, (iii) conviction of a misdemeanor involving moral turpitude, or (iv)
willful failure to report to work for more than thirty (30) continuous days not
supported by a licensed physician's statement, all as determined only by a
majority of the Incumbent Board or the Committee, as the case may be.
(c) A "Change of Control" shall be deemed to have occurred if:
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) (a "Person") becomes the beneficial owner, directly or indirectly,
of twenty percent (20%) or more of the combined voting power of RSI's
outstanding voting securities ordinarily having the right to vote for the
election of directors of RSI; provided, however, that for purposes of this
subparagraph (i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition by any employee benefit plan or plans (or related
trust) of RSI and its subsidiaries and affiliates or (B) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B) and
(C) of subparagraph (iii) of this Section 2(c); or
(ii) the individuals who, as of August 18, 1995, constituted the Board
of Directors of RSI (the "Board" generally and as of August 18, 1995 the
"Incumbent Board") cease for any reason to constitute at least two-thirds (2/3)
of the Board, provided that any person becoming a director subsequent to August
18, 1995 whose election, or nomination for election, was approved by a vote of
the persons comprising at least two-thirds (2/3) of the Incumbent Board (other
than an election or
<PAGE>
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the 1934 Act) shall be, for purposes
of this Plan, considered as though such person were a member of the Incumbent
Board; or
(iii) there is a reorganization, merger or consolidation of RSI (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of RSI's outstanding Common Stock and
outstanding voting securities ordinarily having the right to vote for the
election of directors of RSI immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities ordinarily having the
right to vote for the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns RSI or all
or substantially all of RSI's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of RSI's outstanding Common
Stock and outstanding voting securities ordinarily having the right to vote for
the election of directors of RSI, as the case may be, (B) no Person (excluding
any corporation resulting from such Business Combination or any employee benefit
plan or plans (or related trust) of RSI or such corporation resulting from such
Business Combination and their subsidiaries and affiliates) beneficially owns,
directly or indirectly, 20% or more of the combined voting power of the then
outstanding voting securities of the corporation resulting from such Business
Combination and (C) at least two-thirds (2/3) of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(iv) there is a liquidation or dissolution of RSI approved by the
shareholders; or
(v) there is a sale of all or substantially all of the assets of RSI.
If a Change of Control occurs and if a Grantee's employment is terminated prior
to the date on which the Change of Control occurs, and if it is reasonably
demoonstrated by the Grantee that such termination of employment (A) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change of Control or (B) otherwise arose in connection with or in anticipation
of a Change of Control, a Change of Control shall be deemed to have
retroactively occurred on the date immediately prior to the date of such
termination of employment.
(d) The term "Code" shall mean the Internal Revenue Code of 1986 as it may
be amended from time to time.
(e) The term "Committee" shall mean the Compensation Committee of the Board
of Directors of RSI constituted as provided in Section 5 of this Plan.
2
<PAGE>
(f) The term "Common Stock" shall mean the common stock of RSI as from time
to time constituted.
(g) The term "Company" shall mean RSI and its Subsidiaries.
(h) The term "Disability" shall mean total physical or mental disability of
a Grantee as determined by the Committee upon the basis of such evidence as the
Committee in its discretion deems necessary and appropriate.
(i) The term "Employee" shall mean a full-time salaried employee of RSI or
any Subsidiary (which term shall include salaried officers).
(j) The term "Fair Market Value" shall mean, with respect to the Common
Stock, the mean between the highest and lowest sale price for shares as reported
by the composite transaction reporting system for securities listed on the New
York Stock Exchange on the date as of which such determination is being made or
on the most recently preceding date on which there was such a sale.
(k) The term "Grantee" shall mean an Employee who is selected by the
Committee to receive an Award under this Plan and in the case of a deceased
Employee shall mean the beneficiary of the Employee.
(l) The term "Incentive Stock Option" shall mean a Stock Option granted
under this Plan or a previously granted Stock Option that is redesignated by the
Committee as an Incentive Stock Option which is intended to constitute an
incentive stock option within the meaning of Section 422(b) of the Code.
(m) The term "Limited SAR" shall mean a Limited Stock Appreciation Right
granted by the Committee pursuant to Section 9 of this Plan.
(n) The term "Non-employee Director" shall mean any person who qualifies as
a non-employee director as defined in Rule 16b-3, as promulgated under the 1934
Act, or any successor definition.
(o) The term "Non-qualified Stock Option" shall mean a Stock Option granted
under this Plan which is not intended to qualify under Section 422(b) of the
Code.
(p) The term "Offer" shall mean any tender offer or exchange offer for
Shares, other than one made by the Company, including all amendments and
extensions of any such Offer.
(q) The term "Option" shall mean any stock option granted under this Plan.
(r) The term "Performance Goals" shall have the meaning set forth in Section
10(c) of this Plan.
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(s) The term "Performance Period" shall have the meaning set forth in
Section 10(d) of this Plan.
(t) The term "Performance Units" shall mean Performance Units granted by the
Committee pursuant to Section 10 of this Plan.
(u) The term "Plan" shall mean the Ryder System, Inc. 1995 Stock Incentive
Plan as the same shall be amended.
(v) The term "Price" shall mean, upon the occurrence of a Change of Control,
the excess of the highest of:
(i) the highest closing price of the Common Stock reported by the
composite transaction reporting system for securities listed on the New York
Stock Exchange within the sixty (60) days preceding the date of exercise;
(ii) the highest price per share of Common Stock included in a filing
made by any Person on any Schedule 13D pursuant to Section 13(d) of the 1934 Act
as paid within the sixty (60) days prior to the date of such report; and
(iii) the value of the consideration to be received by the holders of
Common Stock, expressed on a per share basis, in any transaction referred to in
subparagraph (iii), (iv) or (v) of Section 2(c), with all noncash consideration
being valued in good faith by the Incumbent Board;
over the purchase price per Share at which the related Option is exercisable as
applicable, except that Incentive Stock Options and, if and to the extent
required in order for the related Option to be treated as an Incentive Stock
Option, SARs and Limited SARs granted with respect to Incentive Stock Options,
are limited to the spread between the Fair Market Value of Common Stock on the
date of exercise and the purchase price per Share at which the related Option is
exercisable.
(y) The term "Restricted Period" shall have the meaning set forth in Section
11(a) of this Plan.
(z) The term "RSI" shall mean Ryder System, Inc.
(aa) The term "Restricted Stock Rights" shall mean a Restricted Stock Right
granted by the Committee pursuant to Section 11 of this Plan.
(bb) The term "Retirement" shall mean retirement under the provisions of the
various retirement plans of the Company (whichever is appropriate to a
particular Grantee) as then in effect, or in the absence of any such retirement
plan being applicable, as determined by the Committee.
(cc) The term "SAR" shall mean a Stock Appreciation Right granted by the
Committee pursuant to the provisions of Section 8 of this Plan.
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(dd) The term "Shares" shall mean shares of the Common Stock and any shares
of stock or other securities received as a result of the adjustment provided for
in Section 12 of this Plan.
(ee) The term "Spread" with respect to a SAR shall have the meaning set
forth in Section 8(b) of this Plan, and with respect to a Limited SAR, the
meanings set forth in Sections 9(c) and 9(d) of this Plan.
(ff) The term "Stock Option" shall mean any stock option granted under this
Plan.
(gg) The term "Subsidiary" shall mean any corporation, other than RSI, or
other form of business entity more than fifty percent (50%) of the voting
interest of which is owned or controlled, directly or indirectly, by RSI and
which the Committee designates for participation in this Plan.
(hh) The term "Termination Date" shall mean the date that a Grantee ceases
to be employed by RSI or any Subsidiary for any reason; provided, however, it
shall mean the end of any severance period applicable to a Grantee with respect
to any Non-qualified Stock Options held by such Grantee.
(ii) The term "Year" shall mean a calendar year.
3. SHARES OF STOCK SUBJECT TO THIS PLAN.
(a) Subject to the provisions of Paragraph (b) of this Section 3, no more
than 3,300,000 Shares shall be issuable pursuant to grants under this Plan.
Shares issued pursuant to this Plan may be either authorized but unissued or
reacquired Shares purchased on the open market or otherwise.
(b) In the event any Stock Option or Restricted Stock Right expires or
terminates unexercised or any Restricted Stock Right is forfeited or cancelled,
the number of Shares subject to such Stock Option or Restricted Stock Right
shall again become available for issuance under this Plan, subject to the
provisions of Sections 7(a), 8(a), 9(b) and 10(i) of this Plan.
(c) No Grantee shall be eligible to receive any Stock Option or series of
Stock Options covering, in the aggregate, more than 800,000 Shares during the
term of this Plan.
4. PARTICIPATION. Awards under this Plan shall be limited to key executive
Employees selected from time to time by the Committee.
5. ADMINISTRATION. This Plan shall be administered by the Compensation Committee
of the Board of Directors of RSI which shall consist of two or more members of
the Board of Directors, each of whom shall be a Non-employee Director. All
members of the Committee shall be "outside directors" as defined or interpreted
for purposes of Section 162(m) of the Code. The Committee shall have
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plenary authority, subject to the express provisions of this Plan, to (i) select
Grantees; (ii) establish and adjust Performance Goals and Performance Periods
for Performance Units; (iii) determine the nature, amount, time and manner of
payment of Awards made under this Plan, and the terms and conditions applicable
thereto; (iv) interpret this Plan; (v) prescribe, amend and rescind rules and
regulations relating to this Plan; (vi) determine whether and to what extent
Stock Options previously granted under this Plan shall be redesignated as
Incentive Stock Options and, in this connection, amend any Stock Option
Agreement or make or authorize any reports or elections or take any other action
to the extent necessary to implement the redesignation of any Stock Option as an
Incentive Stock Option, provided that any redesignation of a previously granted
Stock Option as an Incentive Stock Option shall not be effective unless and
until consented to by the Grantee; and (vii) make all other determinations
deemed necessary or advisable for the administration of this Plan. The
Committee's determination on the foregoing matters shall be conclusive. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present, or acts
approved in writing by all members of the Committee without a meeting, shall be
the acts of the Committee.
6. AWARDS. Subject to the provisions of Section 3 of this Plan, the Committee
shall determine Awards taking into consideration, as it deems appropriate, the
responsibility level and performance of each Grantee. The Committee may grant
the following types of Awards: Stock Options pursuant to Section 7 hereof, SARs
pursuant to Section 8 hereof, Limited SARs pursuant to Section 9 hereof,
Performance Units pursuant to Section 10 hereof and Restricted Stock Rights
pursuant to Section 11 hereof. Unless otherwise determined by the Committee, a
Grantee may not be granted in any Year both (i) a Restricted Stock Right and
(ii) a Stock Option, SAR, Limited SAR or Performance Unit.
7. STOCK OPTIONS.
(a) The Committee from time to time may grant Stock Options either alone or
in conjunction with and related to SARs, Limited SARs and/or Performance Units
to key executive Employees selected by the Committee as being eligible therefor.
The Stock Options may be of two types, Incentive Stock Options and Non-qualified
Stock Options. Each Stock Option shall cover such number of Shares and shall be
on such other terms and conditions not inconsistent with this Plan as the
Committee may determine and shall be evidenced by a Stock Option Agreement
setting forth such terms and conditions executed by the Company and the Grantee.
The Committee shall determine the number of Shares subject to each Stock Option.
The number of Shares subject to an outstanding Stock Option shall be reduced on
a one for one basis to the extent that any related SAR, Limited SAR or
Performance Unit is exercised and such Shares shall not again become available
for issuance pursuant to this Plan.
In the case of Stock Options, the aggregate Fair Market Value
(determined as of the date of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an Employee during
any Year under this Plan or any other plan of the Company shall not
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exceed $100,000. To the extent, if any, that the Fair Market Value of such
Common Stock with respect to which Incentive Stock Options are exercisable
exceeds $100,000, such Incentive Stock Options shall be treated as separate
Non-qualified Stock Options. For purposes of the two immediately preceding
sentences of this subparagraph (a), Stock Options shall be taken into account in
the order in which they were granted.
(b) Unless the Committee shall determine otherwise, each Stock Option may be
exercised only if the Grantee has been continuously employed by RSI or any
Subsidiary for a period of at least one (1) year commencing on the date the
Stock Option is granted; provided, however, that this provision shall not apply
in the event of a Change of Control.
(c) Each Stock Option shall be for such term (but, in no event for greater
than ten years) and shall be exercisable in such installments as shall be
determined by the Committee at the time of grant of the Stock Option.
The Committee may, at any time, provide for the acceleration of
installments or any part thereof.
(d) The price per Share at which Shares may be purchased upon the exercise
of a Stock Option shall be determined by the Committee on the grant of the Stock
Option but such price shall not be less than one hundred percent (100%) of the
Fair Market Value on the date of grant of the Stock Option. If a Grantee owns
(or is deemed to own under applicable provisions of the Code and rules and
regulations promulgated thereunder) more than ten percent (10%) of the combined
voting power of all classes of the stock of the Company and a Stock Option
granted to such Grantee is intended to qualify as an Incentive Stock Option, the
Incentive Stock Option price shall be no less than one hundred and ten percent
(110%) of the Fair Market Value of the Common Stock on the date the Incentive
Stock Option is granted and the term of such Incentive Stock Option shall be no
more than five years.
(e) Except as provided in Paragraphs (h) and (l) of this Section 7, no Stock
Option may be exercised unless the Grantee, at the time of exercise, is an
Employee and has continuously been an Employee of RSI or any Subsidiary since
the grant of such Stock Option. A Grantee shall not be deemed to have terminated
his period of continuous employ with RSI or any Subsidiary if he leaves the
employ of RSI or any Subsidiary for immediate reemployment with RSI or any
Subsidiary.
(f) To exercise a Stock Option, the Grantee shall (i) give written notice to
the Company in form satisfactory to the Committee indicating the number of
Shares which he elects to purchase, (ii) deliver to the Company payment of the
full purchase price of the Shares being purchased (A) in cash or a certified or
bank cashier's check payable to the order of the Company, or (B) with the
approval of the Committee, in Shares of the Common Stock having a Fair Market
Value on the date of exercise equal to the purchase price, or a combination of
the foregoing having an aggregate Fair Market Value equal to such purchase
price, and (iii) deliver to the Secretary of the Company such written
representations, warranties and covenants as the Company may require under
Section 16(a) of this Plan.
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(g) A Grantee of any Stock Option shall not have any rights as a shareholder
until the close of business on the date on which the Stock Option has been
exercised.
(h) Notwithstanding any other provision of this Plan, unless otherwise
determined by the Committee prior to a Change of Control, in the event of a
Change of Control, each Stock Option not previously exercised or expired under
the terms of this Plan shall become immediately exercisable in full and shall
remain exercisable to the full extent of the Shares available thereunder,
regardless of any installment provisions applicable thereto, for the remainder
of its term, unless Section 14(a) of this Plan applies or the Grantee has been
terminated for cause, in which case the Stock Options shall automatically
terminate as of the Incumbent Board's determination pursuant to Section 14(a) or
the Grantee's Termination Date, as appropriate.
(i) If the Committee so determines prior to or during the thirty (30) day
period following the occurrence of a Change of Control, Grantees of Stock
Options not otherwise exercised or expired under the terms of this Plan as to
which no SARs or Limited SARs are then exercisable may, in lieu of exercising,
require RSI to purchase for cash all such Stock Options or portions thereof for
a period of sixty (60) days following the occurrence of a Change of Control at
the Price specified in Section 2(v).
(j) Any determination made by the Committee pursuant to Section 7(h) or 7(i)
may be made as to all eligible Stock Options or only as to certain of such Stock
Options specified by the Committee. Once made, any determination by the
Committee pursuant to Section 7(h) or 7(i) shall be irrevocable.
(k) The Company intends that Section 7(i) shall comply with the requirements
of Rule 16b-3 under the 1934 Act (the "Rule") during the term of this Plan.
Should any provision of Section 7(i) not be necessary to comply with the
requirements of the Rule, or should any additional provisions be necessary for
Section 7(i) to comply with the requirements of the Rule, the Committee may
amend this Plan or any Stock Option agreement to add to or modify the provisions
thereof accordingly.
(l) Notwithstanding any of the provisions of this Section 7, a Stock Option
shall in all cases terminate and not be exercisable after the expiration of the
term of the Stock Option established by the Committee. Except as provided in
Section 7(h), Stock Options shall be exercisable after the Grantee ceases to be
employed by RSI or any Subsidiary as follows, unless otherwise determined by the
Committee:
(i) In the event that a Grantee ceases to be employed by RSI or any
Subsidiary by reason of Disability or Retirement, (A) any Non-qualified Stock
Option not previously exercised or expired shall continue to vest and be
exercisable during the three (3) year period following the Grantee's Termination
Date, and to the extent it is exercisable at the expiration of such three (3)
year period, it shall continue to be exercisable by such Grantee or such
Grantee's legal representatives, heirs or legatees for the term of such
Non-qualified Stock Option, and (B) any Incentive Stock Option shall, to the
extent it was exercisable on the Termination Date, continue to be exercisable by
such Grantee
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or such Grantee's legal representatives, heirs or legatees for the term of such
Incentive Stock Option; provided, however, that in order to qualify for the
special tax treatment afforded by Section 421 of the Code, Incentive Stock
Options must be exercised within the three (3) month period commencing on the
Termination Date (the exercise period shall be one (1) year in the case of
termination by reason of disability, within the meaning of Section 22(e)(3) of
the Code). Incentive Stock Options not exercised within such three (3) month
period shall be treated as Non-qualified Stock Options.
(ii) In the event that a Grantee ceases to be employed by RSI or any
Subsidiary by reason of death, any Stock Option shall, to the extent it was
exercisable on the Termination Date, continue to be exercisable by such
Grantee's legal representatives, heirs or legatees for the term of such Stock
Option.
(iii) Except as otherwise provided in subparagraph (i) or (ii) above,
in the event that a Grantee ceases to be employed by RSI or any Subsidiary for
any reason other than termination for cause, any Stock Option shall, to the
extent it was exercisable on the Termination Date, continue to be exercisable
for a period of three (3) months commencing on the Termination Date and shall
terminate at the expiration of such period; provided, however, that in the event
of the death of the Grantee during such three (3) month period, such Stock
Option shall, to the extent it was exercisable on the Termination Date, be
exercisable by the Grantee's personal representatives, heirs or legatees for a
period of one (1) year commencing on the date of the Grantee's death and shall
terminate at the expiration of such period.
(m) Except as otherwise provided in Section 7(1), a Stock Option shall
automatically terminate as of the Termination Date, provided that if a Grantee's
employment is interrupted by reason of Disability or a leave of absence (as
determined by the Committee) the Committee may permit the exercise of some or
all of the Stock Options granted on such terms and for such period of time as it
shall determine.
8. STOCK APPRECIATION RIGHTS.
(a) The Committee shall have authority in its discretion to grant a SAR to
any Grantee of a Stock Option with respect to all or some of the Shares covered
by such Stock Option. Each SAR shall be on such terms and conditions not
inconsistent with this Plan as the Committee may determine and shall be
evidenced by a SAR Agreement setting forth such terms and conditions executed by
the Company and the holder of the SAR. A SAR may be granted either at the time
of grant of a Stock Option or at any time thereafter during its term. A SAR may
be granted to a Grantee irrespective of whether such Grantee has a Limited SAR.
Each SAR shall be exercisable only if and to the extent that the related Stock
Option is exercisable. Upon the exercise of a SAR, the related Stock Option
shall cease to be exercisable to the extent of the Shares with respect to which
such SAR is exercised and shall be considered to have been exercised to that
extent for purposes of determining the number of Shares available for the grant
of further Awards pursuant to this Plan. Upon the exercise or
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termination of a Stock Option, the SAR related to such Stock Option shall
terminate to the extent of the Shares with respect to which such Stock Option
was exercised or terminated.
(b) The term "Spread" as used in this Section 8 shall mean, with respect to
the exercise of any SAR, an amount equal to the product computed by multiplying
(i) the excess of (A) the Fair Market Value per Share on the date such SAR is
exercised over (B) the purchase price per Share at which the related Stock
Option is exercisable by (ii) the number of Shares with respect to which such
SAR is being exercised, provided; however, that the Committee may at the grant
of any SAR limit the maximum amount of the Spread to be paid upon the exercise
thereof.
(c) Only if and to the extent required in order for the related Stock Option
to be treated as an Incentive Stock Option, a SAR may be exercised only when
there is a positive Spread, that is, when the Fair Market Value per Share
exceeds the purchase price per Share at which the related Stock Option is
exercisable. Upon the exercise of a SAR, the Committee shall pay to the Grantee
exercising the SAR an amount equivalent to the Spread. The Committee shall have
the sole and absolute discretion to determine whether payment for such SAR will
be made in cash, Shares or a combination of cash and Shares, provided, that any
Shares used for payment shall be valued at their Fair Market Value on the date
of the exercise of the SAR.
(d) The Company intends that this Section 8 shall comply with the
requirements of the Rule during the term of this Plan. Should any provision of
this Section 8 not be necessary to comply with the requirements of the Rule or
should any additional provisions be necessary for this Section 8 to comply with
the requirements of the Rule, the Committee may amend this Plan or any Award
agreement to add to or modify the provisions thereof accordingly.
(e) To exercise a SAR, the Grantee shall (i) give written notice to the
Company in form satisfactory to the Committee specifying the number of Shares
with respect to which such holder is exercising the SAR and (ii) deliver to the
Company such written representations, warranties and covenants as the Company
may require under Section 16(a) of this Plan.
(f) A person exercising a SAR shall not be treated as having become the
registered owner of any Shares issued on such exercise until such Shares are
issued.
(g) The exercise of a SAR shall reduce the number of Shares subject to the
related Stock Option on a one for one basis.
9. LIMITED SARS.
(a) The Committee shall have authority in its discretion to grant a Limited
SAR to the holder of any Stock Option with respect to all or some of the Shares
covered by such Stock Option; provided, however, that in the case of Incentive
Stock Options, the Committee may grant Limited SARs only if and to the extent
that the grant of such Limited SARs is consistent with the treatment
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of the Stock Option as an Incentive Stock Option. Each Limited SAR shall be on
such terms and conditions not inconsistent with this Plan as the Committee may
determine and shall be evidenced by a Limited SAR Agreement setting forth such
terms and conditions executed by the Company and the holder of the Limited SAR.
A Limited SAR may be granted to a Grantee irrespective of whether such Grantee
has a SAR.
(b) Limited SARs may be exercised only during the sixty (60) day period
commencing after the occurrence of a Change of Control.
Each Limited SAR shall be exercisable only if and to the extent that
the related Option is exercisable. Upon the exercise of a Limited SAR, the
related Stock Option shall cease to be exercisable to the extent of the Shares
with respect to which such Limited SAR is exercised, and the Stock Option shall
be considered to have been exercised to that extent for purposes of determining
the number of Shares available for the grant of further Awards pursuant to this
Plan. Upon the exercise or termination of an Option, the Limited SAR with
respect to such Option shall terminate to the extent of the Shares with respect
to which the Option was exercised or terminated.
(c) For any Limited SAR, the term "Spread" as used in this Section 9 shall
mean an amount equal to the product computed by multiplying (A) the Price
specified in Section 2(v) by (B) the number of Shares with respect to which such
Limited SAR is being exercised.
(d) Only if and to the extent required in order for the related Stock Option
to be treated as an Incentive Stock Option, a Limited SAR may be exercised only
when there is a positive Spread, that is, when the Fair Market value per Share
exceeds the purchase price per Share at which the related Stock Option is
exercisable. Upon the exercise of a Limited SAR, the holder thereof shall
receive an amount in cash equal to the Spread.
(e) Notwithstanding any other provision of this Plan, no SAR or Performance
Unit may be exercised with respect to any Stock Option at a time when any
Limited SAR with respect to such Stock Option held by the Grantee of such SAR or
Performance Unit may be exercised.
(f) The Company intends that this Section 9 shall comply with the
requirements of the Rule during the term of this Plan. Should any provision of
this Section 9 not be necessary to comply with the requirements of the Rule, or
should any additional provisions be necessary for this Section 9 to comply with
the requirements of the Rule, the Committee may amend this Plan or any Award
agreement to add to or modify the provisions thereof accordingly.
(g) To exercise a Limited SAR, the holder shall give written notice to the
Company in form satisfactory to the Committee specifying the number of Shares
with respect to which he is exercising the Limited SAR.
(h) The exercise of a Limited SAR shall reduce on a one for one basis the
number of Shares subject to the related Stock Option.
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10. PERFORMANCE UNITS.
(a) In conjunction with the granting of Stock Options under this Plan, the
Committee may grant Performance Units relating to such Stock Options; provided,
however, that in the case of Incentive Stock Options, the Committee may grant
Performance Units only if and to the extent that the grant of such Performance
Units is consistent with the treatment of the Stock Option as an Incentive Stock
Option. Each grant of Performance Units shall cover such number of Shares and
shall be on such other terms and conditions not inconsistent with this Plan as
the Committee may determine and shall be evidenced by a Performance Unit
Agreement setting forth such terms and conditions executed by the Company and
the Grantee of the Performance Units. The number of Performance Units granted
shall be equal to a specified number of Shares subject to the related Stock
Options. The Committee shall value such Units to the extent that Performance
Goals are achieved; provided, however, that in no event shall the value per
Performance Unit exceed one hundred and fifty percent (150%) of the purchase
price per Share at which the related Stock Option is exercisable.
(b) The Committee shall have full and final authority to establish
Performance Goals for each Performance Period on the basis of such criteria, and
the attainment of such objectives, as the Committee may from time to time
determine. In setting Performance Goals, the Committee may take into
consideration such matters which it deems relevant and such financial and other
criteria including but not limited to projected cumulative compounded rate of
growth in earnings per Share and average return on equity. During any
Performance Period, the Committee shall have the authority to adjust Performance
Goals for the Performance Period as it deems equitable in recognition of
extraordinary or nonrecurring events experienced by the Company during the
Performance Period including, but not limited to, changes in applicable
accounting rules or principles or changes in the Company's methods of accounting
during the Performance Period or significant changes in tax laws or regulations
which affect the financial results of the Company.
(c) The term "Performance Goals" as used in this Section 10 shall mean the
performance objectives established by the Committee for the Company for a
Performance Period for the purpose of determining if, as well as the extent to
which, a Performance Unit shall be earned.
(d) The term "Performance Period" as used in this Section 10 shall mean the
period of time selected by the Committee (which period shall be not more than
five nor less than three years) commencing on January 1 of the Year in which the
grant of Performance Units is made, during which the performance of the Company
is measured for the purpose of determining the extent to which Performance Units
have been earned.
(e) Performance Units shall be earned to the extent that Performance Goals
and other conditions established in accordance with Paragraph (b) of this
Section 10 are met. The Company shall promptly notify each Grantee of the extent
to which Performance Units have been earned by such Grantee. A Performance Unit
may be exercised only during the period following such notice and prior to
expiration of the related option. Performance Units which have been earned shall
be paid after exercise by the Grantee pursuant to Paragraph (h) of this Section
10. The Committee shall have
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the sole and absolute discretion to determine whether payment for such
Performance Unit will be made in cash, Shares or a combination of cash and
Shares, provided that any Shares used for payment shall be valued at their Fair
Market Value on the date of the exercise of the Performance Unit.
(f) Unless otherwise determined by the Committee, in the event that a
Grantee of Performance Units ceases to be employed by RSI or any Subsidiary
during the term of the related Stock Option, the Performance Units held by him
shall be exercisable only to the extent the related Stock Option is exercisable
and shall be forfeited to the extent that the related Stock Option was not
exercisable on the Termination Date.
(g) The Company intends that this Section 10 shall comply with the
requirements of Section 16(b) of the 1934 Act and the rules thereunder, as from
time to time in effect, including the Rule. Should any provision of this Section
10 not be necessary to comply with the requirements of said Section 16(b) and
the rules thereunder or should any additional provision be necessary for this
Section 10 to comply with the requirements of Section 16(b) and the rules
thereunder, the Committee may amend this Plan or any Award agreement to add to
or modify the provisions thereof accordingly.
(h) To exercise Performance Units, the Grantee shall give written notice to
the Company in form satisfactory to the Committee addressed to the Secretary of
the Company specifying the number of Shares with respect to which he is
exercising Performance Units.
(i) The exercise of Performance Units shall reduce on a one for one basis
the number of Shares subject to the related Stock Option.
11. RESTRICTED STOCK RIGHTS.
(a) The Committee from time to time may grant Restricted Stock Rights to key
executive Employees selected by the Committee as being eligible therefor, which
would entitle a Grantee to receive a stated number of Shares subject to
forfeiture of such Rights if such Grantee failed to remain continuously in the
employ of RSI or any Subsidiary for the period stipulated by the Committee (the
"Restricted Period").
(b) Restricted Stock Rights shall be subject to the following restrictions
and limitations:
(i) The Restricted Stock Rights may not be sold, assigned, transferred,
pledged, hypothecated, or otherwise disposed of;
(ii) Except as otherwise provided in Paragraph (d) of this Section 11,
the Restricted Stock Rights and the Shares subject to such Restricted Stock
Rights shall be forfeited and all rights of a Grantee to such Restricted Stock
Rights and Shares shall terminate without any payment of consideration by the
Company if the Grantee fails to remain continuously as an Employee of RSI or any
Subsidiary for the Restricted Period. A Grantee shall not be deemed to have
terminated his
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period of continuous employment with RSI or any Subsidiary if he leaves the
employ of RSI or any Subsidiary for immediate reemployment with RSI or any
Subsidiary.
(c) The Grantee of Restricted Stock Rights shall not be entitled to any of
the rights of a holder of the Common Stock with respect to the Shares subject to
such Restricted Stock Rights prior to the issuance of such Shares pursuant to
this Plan. During the Restricted Period, for each Share subject to a Restricted
Stock Right, the Company will pay the holder an amount in cash equal to the cash
dividend declared on a Share during the Restricted Period on or about the date
the Company pays such dividend to the stockholders of record.
(d) In the event that the employment of a Grantee terminates by reason of
death, Disability or Retirement, such Grantee shall be entitled to receive the
number of Shares subject to the Restricted Stock Right multiplied by a fraction
(x) the numerator of which shall be the number of days between the date of grant
of such Restricted Stock Right and the date of such termination of employment,
and (y) the denominator of which shall be the number of days in the Restricted
Period, provided, however, that any fractional Share shall be cancelled. If a
Grantee's employment is interrupted by reason of Disability or a leave of
absence (as determined by the Committee), then the Committee may permit the
delivery of the Shares subject to the Restricted Stock Right in such amounts as
the Committee may determine.
(e) Notwithstanding Paragraphs (a) and (b) of this Section 11, unless
otherwise determined by the Committee prior to the occurrence of a Change of
Control, in the event of a Change of Control all restrictions on Restricted
Stock shall expire and all Shares subject to Restricted Stock Rights shall be
issued to the Grantees. Additionally, the Committee may, at any time, provide
for the acceleration of the Restricted Period and of the issuance of all or part
of the Shares subject to Restricted Stock Rights. Any determination made by the
Committee pursuant to this Section 11(e) may be made as to all Restricted Stock
Rights or only as to certain Restricted Stock Rights specified by the Committee.
Once made, any determination by the Committee pursuant to this Section 11(e)
shall be irrevocable.
(f) When a Grantee shall be entitled to receive Shares pursuant to a
Restricted Stock Right, the Company shall issue the appropriate number of Shares
registered in the name of the Grantee.
12. DILUTION AND OTHER ADJUSTMENTS. If there shall be any change in the Shares
subject to this Plan or any Award granted under this Plan as a result of merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure, adjustments may be made by the
Committee, as it may deem appropriate, in the aggregate number and kind of
Shares subject to this Plan or to any outstanding Award, and in the terms and
provisions of this Plan and any Awards granted hereunder, in order to reflect,
on an equitable basis, any such change in the Shares contemplated by this
Section 12. Any adjustment made by the Committee pursuant to this Section 12
shall be conclusive and binding upon the Grantee, the Company and any other
related person.
14
<PAGE>
13. SUBSTITUTE OPTIONS. Incentive and/or Non-qualified Stock Options may be
granted under this Plan from time to time in substitution for either incentive
or non-qualified stock options or both held by employees of other corporations
who are about to become employees of the Company as the result of a merger,
consolidation or reorganization of the employing corporation with the Company,
or the acquisition by the Company of the assets of the employing corporation, or
the acquisition by the Company of stock of the employing corporation as the
result of which it becomes a Subsidiary of the Company. The terms and conditions
of the Stock Options so granted may vary from the terms and conditions set forth
in this Plan to such extent as the Committee at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted, but, in the event that the
option for which a substitute Stock Option is being granted is an incentive
stock option, no variation shall adversely affect the status of any substitute
Stock Option as an incentive stock option under the Code.
14. MISCELLANEOUS PROVISIONS.
(a) Notwithstanding any other provision of this Plan, no Stock Option, SAR,
Limited SAR or Restricted Stock Right granted hereunder may be exercised nor
shall any payment in respect of any Performance Unit granted hereunder be made
and all rights of the Grantee thereof, or of the Grantee's legal
representatives, heirs or legatees, shall be forfeited if, prior to the time of
such exercise or payment, the Committee (or in the event of a Change of Control,
the Incumbent Board) determines that the Grantee has (i) used for profit or
disclosed confidential information or trade secrets of the Company to
unauthorized persons, or (ii) breached any contract with, or violated any legal
obligation to, the Company, or (iii) engaged in any other activity which would
constitute grounds for termination for cause of the Grantee by the Company. The
Committee (or the Incumbent Board) shall give a Grantee written notice of such
determination prior to making any such forfeiture. The Committee (or the
Incumbent Board) may waive the conditions of this Paragraph in full or in part
if, in its sole judgment, such waiver will have no substantial adverse effect
upon the Company. The determination of the Committee (or the Incumbent Board) as
to the occurrence of any of the events specified above and to the forfeiture, if
any, shall be conclusive and binding upon the Grantee, the Company and any other
related person.
(b) The Grantee of an Award shall have no rights as a stockholder with
respect thereto, except as otherwise expressly provided in this Plan, unless and
until certificates for Shares are issued.
(c) No Award or any rights or interests therein shall be assignable or
transferable by the Grantee except by will or the laws of descent and
distribution. During the lifetime of the Grantee, an Award shall be exercisable
only by the Grantee or the Grantee's guardian or legal representative.
(d) The Company shall have the right to deduct from all Awards granted
hereunder to be distributed in cash any Federal, state, local or foreign taxes
required by law to be withheld with respect to such cash payments. In the case
of Awards to be distributed in Shares, the holder or other person receiving such
Common Stock shall be required, as a condition of such distribution, either to
15
<PAGE>
pay to the Company at the time of distribution thereof the amount of any such
taxes which the Company is required to withhold with respect to such Shares or
to have the number of the Shares, valued at their Fair Market Value on the date
of distribution, to be distributed reduced by an amount equal to the value of
such taxes required to be withheld.
(e) No Employee shall have any claim or right to be granted an Award under
this Plan, nor having been selected as a Grantee for one Year, any right to be a
Grantee in any other Year. Neither this Plan nor any action taken hereunder
shall be construed as giving any Grantee any right to be retained in the employ
of RSI or any Subsidiary, and the Company expressly reserves its right at any
time to dismiss any Grantee with or without cause.
(f) The costs and expense of administering this Plan shall be borne by the
Company and not charged to any Award nor to any Grantee.
(g) This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under this Plan, and payment of Awards
shall be subordinate to the claims of the Company's general creditors.
(h) Whenever used in this Plan, the masculine gender shall include the
feminine or neuter wherever necessary or appropriate and vice versa and the
singular shall include the plural and vice versa.
(i) With respect to Grantees subject to Section 16 of the 1934 Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of this Plan or action by the Committee fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Committee. Moreover, in the event this Plan does not include a provision
required by Rule 16b-3 to be stated herein, such provision (other than one
relating to eligibility requirements, or the price and amount of Awards) shall
be deemed automatically to be incorporated by reference into this Plan insofar
as Grantees subject to Section 16 are concerned.
15. INDEMNIFICATION OF THE COMMITTEE. Service on the Committee shall constitute
service as a director of the Company and members of the Committee shall be
entitled to indemnification, advancement of expenses and reimbursement as
directors of the Company pursuant to its Restated Articles of Incorporation,
By-Laws, resolutions of the Board of Directors of RSI or otherwise.
16. COMPLIANCE WITH LAW.
(a) Each Grantee, to permit the Company to comply with the Securities Act of
1933, as amended (the "1933 Act"), and any applicable blue sky or state
securities laws, shall represent in
16
<PAGE>
writing to the Company at the time of the grant of an Award and at the time of
the issuance of any Shares thereunder that such Grantee does not contemplate and
shall not make any transfer of any Shares to be acquired under an Award except
in compliance with the 1933 Act and such Grantee shall enter into such
agreements and make such other representations as, in the opinion of counsel to
the Company, shall be sufficient to enable the Company legally to issue the
Shares without registration thereof under the 1933 Act. Certificates
representing Shares to be acquired under Awards shall bear legends as counsel
for the Company may indicate are necessary or appropriate to accomplish the
purposes of this Section 16.
(b) If at any time the Committee shall determine that the listing,
registration or qualification of the Shares subject to any Award upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of or issuance of Shares under
such Award, such Shares shall not be issued unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.
17. AMENDMENT OF THE PLAN. The Committee may at any time (i) terminate this Plan
or (ii) modify or amend this Plan in any respect, except that, to the extent
required to maintain the qualification of this Plan under Section 16 of the 1934
Act, or as otherwise required to comply with applicable law or the regulations
of any stock exchange on which the Shares are listed, the Committee may not,
without shareholder approval, (A) materially increase the benefits accruing to
Grantees under this Plan, (B) materially increase the number of securities which
may be issued under this Plan or (C) materially modify the requirements as to
eligibility for participation in this Plan. Should this Plan require amendment
to maintain full legal compliance because of rules, regulations, opinions or
statutes issued by the SEC, the U.S. Department of the Treasury or any other
governmental or governing body, then the Committee or the Board may take
whatever action, including but not limited to amending or modifying this Plan,
is necessary to maintain such compliance. The termination or any modification or
amendment of this Plan shall not, without the consent of any Grantee involved,
adversely affect his rights under an Award previously granted to him.
18. EFFECTIVE DATE AND TERM OF THE PLAN.
(a) This Plan shall become effective on May 5, 1995, subject to the approval
of the shareholders of RSI.
(b) Unless previously terminated in accordance with Section 17 of this Plan,
this Plan shall terminate on the close of business on May 4, 2005, after which
no Awards shall be granted under this Plan. Such termination shall not affect
any Awards granted prior to such termination.
17
EXHIBIT 10.5(b)
RYDER SYSTEM, INC.
BOARD OF DIRECTORS STOCK AWARD PLAN
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Purpose of this Plan......................................... 1
2. Effective Date and Term of this Plan ........................ 1
3. Administration of this Plan.................................. 1
4. Common Stock Subject to this Plan............................ 1
5. Eligible Persons............................................. 2
6. Awards ...................................................... 2
7. Units........................................................ 2
8. Payment Elections for Units.................................. 3
9. Stock Options................................................ 4
10. Exercise of Options.......................................... 4
11. Cessation of Service on the Board ........................... 4
12. Change of Control ........................................... 5
13. Amendments to this Plan...................................... 6
-i-
<PAGE>
RYDER SYSTEM, INC.
BOARD OF DIRECTORS STOCK AWARD PLAN
1. Purpose of this Plan
The purpose of the Ryder System, Inc. Board of Directors Stock Award Plan (this
"Plan") is to attract and retain persons of outstanding competence to serve as
directors of Ryder System, Inc. (the "Company") and to provide a more direct
link between directors' compensation and shareholder value by increasing the
proportion of directors' compensation which is stock based.
2. Effective Date and Term of this Plan
This Plan shall become effective on May 2, 1997, subject to the approval of the
shareholders of the Company. Unless previously terminated in accordance with
Section 13 of this Plan, this Plan shall terminate on the close of business on
May 1, 2007, after which no awards shall be granted under this Plan. Such
termination shall not affect any awards granted prior to such termination.
3. Administration of this Plan
This Plan shall be administered by the Compensation Committee (the "Committee")
of the Board of Directors (the "Board") of the Company. A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all members of the Committee without a meeting, shall be the acts of the
Committee. The Committee shall have plenary authority, subject to the express
provisions of this Plan, to (i) interpret this Plan; (ii) prescribe, amend and
rescind rules and regulations relating to this Plan; and (iii) make all other
determinations deemed necessary or advisable for the administration of this
Plan.
4. Common Stock Subject to this Plan
The shares of common stock of the Company, par value $.50 per share ("Common
Stock"), to be issued in connection with an award under this Plan may be made
available from authorized but unissued Common Stock, or Common Stock purchased
on the open market or otherwise. Subject to the provisions of the next
succeeding paragraph, the maximum aggregate number of shares of Common Stock for
which awards may be granted under this Plan shall be 200,000 shares. If a Unit
(as defined in Section 7) awarded under this Plan fails to become vested, any
share allocable to that Unit shall become available for grant to other
Participants (as defined in Section 5). If an Option (as defined in Section 9)
granted under this Plan expires or is terminated
<PAGE>
without having been exercised in full, the unpurchased or forfeited shares or
rights to receive shares shall become available for grant to other Participants.
If there shall be any change in the shares of Common Stock subject to this Plan
or any Unit or Option awarded under this Plan as a result of a merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure, adjustments may be made by the
Committee, as it may deem appropriate, in the aggregate number and kind of
shares subject to this Plan or to any outstanding Unit or Option, and in the
terms and provisions of this Plan and any Unit or Option granted hereunder, in
order to reflect, on an equitable basis, any such change in the shares
contemplated by this paragraph. Any adjustment made by the Committee pursuant to
this paragraph shall be conclusive and binding upon the Participant, the Company
and any other related person.
5. Eligible Persons
Participation in this Plan shall be limited to those members of the Board who,
at the time an award is made hereunder, are not employees of the Company or any
of its subsidiaries or affiliates within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (a "Participant"). A member of the Board
who is an employee and who retires or resigns from employment with the Company
or any of its subsidiaries or affiliates, but remains a member of the Board,
shall become a Participant at the time of such termination of employment.
6. Awards
The Committee may grant the following types of awards under this Plan: Units
pursuant to Section 7 hereof and Options pursuant to Section 9 hereof.
7. Units
If this Plan is approved by the shareholders of the Company, effective as of May
2, 1997, the Company will discontinue its current retirement plan for the Board.
The retirement compensation which would have otherwise been payable at
retirement to those individuals who are Participants on May 2, 1997, shall be
converted to a present value dollar amount, based on actuarial assumptions
satisfactory to the Committee. Such dollar amount shall be converted into a
number of restricted stock units ("Units") by dividing such dollar amount by the
average of the Fair Market Values of the Common Stock on the last business day
of each of the three (3) months preceding May 2, 1997. "Fair Market Value" as
used in this Plan shall mean the average of the high and low price of a share of
Common Stock as reported by the composite transaction reporting system for
securities listed on the New York Stock Exchange on the applicable date.
2
<PAGE>
The Company shall maintain an individual book account under this Plan for each
Participant awarded Units pursuant to this Section 7. Such account shall
initially be credited with the number of Units awarded to each Participant and
shall continue to be expressed in Units until such Participant has retired from
the Board. Any dividends or other distributions paid on the Common Stock shall
be credited to each Participant's account in respect of each Unit and shall be
deemed to be reinvested in additional Units based on the Fair Market Value of a
share of Common Stock on the dividend payment or distribution date. In addition,
the number of Units allocated to each Participant's account shall be adjusted to
reflect stock dividends, stock splits and similar transactions affecting the
value of Common Stock as described more fully in Section 4 hereof. The Units in
each Participant's account shall vest on the date of such Participant's
retirement from the Board and shall be paid to such Participant, in an
equivalent number of shares of Common Stock, in accordance with such
Participant's payment election described below in Section 8. Prior to vesting,
no Units in a Participant's account shall be assignable or transferable by such
Participant and no right or interest of any Participant shall be subject to any
lien, obligation or liability.
8. Payment Elections for Units
In connection with the commencement of participation in this Plan, each
Participant eligible to receive an award of Units hereunder shall make an
election (the "Payment Election") concerning the timing of distribution of the
amounts credited to such Participant's account. Any payment from such account
shall commence following such Participant's retirement from the Board, but in no
event prior to one year after receipt by the Committee of such Participant's
initial Payment Election, except for Participants retiring from the Board in
calendar year 1997 who shall receive payment in a lump sum as soon as
practicable following their retirement. The forms of payment available to all
other Participants shall be a lump sum payment or annual installments over a
period not to exceed ten (10) years from the earliest date the Participant may
commence receiving payments hereunder. Subsequent Payment Elections which shall
supersede the Initial Payment Election may be made by a Participant, but any
subsequent Payment Election shall not be valid unless it is made at least one
year prior to the date that the commencement of payments to the Participant
hereunder is otherwise due to commence.
In the event of a Participant's death before the balance from such Participant's
account is fully paid, payment of the balance of such Participant's account
shall be made to such Participant's estate in accordance with the manner
selected by the Participant prior to death; provided, however, the Committee
may, upon consideration of the application of the duly appointed administrator
or executor of such Participant's estate, direct that the balance of such
Participant's account be paid to the estate in a single payment.
3
<PAGE>
9. Stock Options
On the date of each annual meeting of the Company during the term of this Plan,
each Participant shall be granted a non-qualified stock option (an "Option") to
purchase 1,000 shares of Common Stock, provided the Participant will continue to
serve as a member of the Board following the meeting. Individuals who are
elected to the Board during the period of time between annual meetings, and who
would otherwise qualify as a Participant, shall receive an Option to purchase a
pro rata amount of Common Stock. The purchase price for each share of Common
Stock issuable under an Option shall not be less than 100 percent (100%) of the
Fair Market Value of a share of Common Stock on the date of grant. Each Option
shall be for such term (but, in no event for greater than ten years) and shall
be exercisable in such installments as shall be determined by the Committee at
the time of grant of the Option. The Committee may, at any time, provide for the
acceleration of installments or any part thereof. No Option granted under this
Plan shall be assignable or transferable by a Participant except by will or the
laws of descent and distribution. A Participant shall forfeit any Option
assigned or transferred, voluntarily or involuntarily, other than as permitted
under this Section 9. Each Option shall be exercised during the Participant's
lifetime only by the Participant or the Participant's guardian or legal
representative.
10. Exercise of Options
Subject to the provisions of this Section 10, each Option may be exercised in
whole or, from time to time, in part with respect to the number of then
exercisable shares in any sequence desired by the Participant. To exercise an
Option, the Participant shall (i) give written notice to the Company in form
satisfactory to the Committee indicating the number of shares of Common Stock
which the Participant elects to purchase, (ii) deliver to the Company payment of
the full purchase price of the shares being purchased (A) in cash or a certified
or bank cashier's check payable to the order of the Company, or (B) with the
approval of the Committee, in shares of Common Stock having a Fair Market Value
on the date of exercise equal to the purchase price, or (C) a combination of the
foregoing having an aggregate Fair Market Value equal to such purchase price,
and (iii) deliver to the Secretary of the Company such written representations,
warranties and covenants as the Company may require to permit this Plan and any
Options or shares of Common Stock granted or issued hereunder to comply with any
applicable blue sky or other federal or state securities laws. A Participant
shall not have any rights as a shareholder with respect to shares subject to an
Option until the close of business on the date on which the Option has been
exercised.
11. Cessation of Service on the Board
If a Participant's service on the Board ceases for any reason, other than as
specified in the subsequent paragraphs of this Section 11, any Option held by
such Participant shall terminate three (3) months after the date of such
cessation of service; provided, however, that in the event
4
<PAGE>
of the death of the Participant during such three-month period, such Option
shall, to the extent it was exercisable on the date of cessation of service, be
exercisable by the Participant's legal representatives, heirs or legatees for a
period of one (1) year commencing on the date of the Participant's death and
shall terminate at the expiration of such period.
If the cessation of service on the Board is due to the Participant's death, any
Option shall, to the extent it was exercisable on the date of death, continue to
be exercisable by such Participant's legal representatives, heirs or legatees
for the term of such Option.
If the cessation of service is due to the Participant's retirement or
disability, any Option not previously exercised or expired shall continue to
vest and be exercisable during the three (3) year period following the date of
cessation of service, and to the extent it is exercisable at the expiration of
such three (3) year period, it shall continue to be exercisable by such
Participant or such Participant's legal representatives, heirs or legatees for
the term of such Option.
12. Change of Control
Notwithstanding any other provision of this Plan, in the event of a Change of
Control (as defined below), the Units in each Participant's account shall become
immediately vested and shall be paid in full in a lump sum of equivalent shares
of Common Stock to each Participant as soon as practicable following the Change
of Control. In addition, in the event of a Change of Control, each Option not
previously exercised or expired under the terms of this Plan shall become
immediately exercisable in full and shall remain exercisable to the full extent
of the shares of Common Stock available thereunder, regardless of any
installment provisions applicable thereto, for the remainder of its term.
A "Change of Control" shall be deemed to have occurred if:
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) (a "Person") becomes the beneficial owner, directly or indirectly,
of twenty percent (20%) or more of the combined voting power of the Company's
outstanding voting securities ordinarily having the right to vote for the
election of directors of the Company; provided, however, that for purposes of
this subparagraph (i), the following acquisitions shall not constitute a Change
of Control: (A) any acquisition by any employee benefit plan or plans (or
related trust) of the Company and its subsidiaries and affiliates or (B) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subparagraph (iii) of this Section 12; or
(ii) the individuals who, as of August 18, 1995, constituted the Board
(and as of August 18, 1995, the "Incumbent Board") cease for any reason to
constitute at least two-thirds (2/3) of the Board, provided, that any person
becoming a director subsequent to August 18, 1995 whose election, or nomination
for election, was approved by a vote of the persons comprising at least
two-thirds (2/3) of the Incumbent Board (other than an election or nomination of
an individual
5
<PAGE>
whose initial assumption of office is in connection with an actual or threatened
election contest, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the 1934 Act) shall be, for purposes of this Plan, considered
as though such person were a member of the Incumbent Board; or
(iii) there is a reorganization, merger or consolidation of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Company's outstanding Common
Stock and outstanding voting securities ordinarily having the right to vote for
the election of directors of the Company immediately prior to such Business
Combination beneficially own, directly or indirectly, more than fifty percent
(50%) of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities ordinarily
having the right to vote for the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Company's
outstanding Common Stock and outstanding voting securities ordinarily having the
right to vote for the election of directors of the Company, as the case may be,
(B) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan or plans (or related trust) of the
Company or such corporation resulting from such Business Combination and their
subsidiaries and affiliates) beneficially owns, directly or indirectly, 20% or
more of the combined voting power of the then outstanding voting securities of
the corporation resulting from such Business Combination and (C) at least
two-thirds (2/3) of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(iv) there is a liquidation or dissolution of the Company approved by the
shareholders; or
(v) there is a sale of all or substantially all of the assets of the
Company.
13. Amendments to this Plan
The Committee may at any time (i) terminate this Plan or (ii) modify or amend
this Plan in any respect, except that, to the extent required to maintain the
qualification of this Plan under Section 16 of the 1934 Act, or as otherwise
required to comply with applicable law or the regulations of any stock exchange
on which the Common Stock is listed, the Committee may not, without the
shareholders' approval, (A) materially increase the benefits accruing to
Participants under this Plan; (B) materially increase the number of securities
which may be issued under this Plan; or (C) materially modify the requirements
as to eligibility for participation in this Plan. Should this Plan require
amendment to maintain full legal compliance because of rules, regulations,
opinions or
6
<PAGE>
statutes issued by the Securities and Exchange Commission, the U.S. Department
of the Treasury or any other governmental or governing body, then the Committee
or the Board may take whatever action, including but not limited to amending or
modifying this Plan, is necessary to maintain such compliance. The termination
or any modification or amendment of this Plan shall not, without the consent of
any Participant involved, adversely affect rights under a Unit or an Option
previously awarded to such Participant.
Transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of this Plan or action by the Committee fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Committee. Moreover, in the event this Plan does not include a provision
required by Rule 16b-3 to be stated herein, such provision (other than one
relating to eligibility requirements, or the price and amount of Options) shall
be deemed automatically to be incorporated by reference into this Plan.
7
EXHIBIT 10.9(a)
RYDER SYSTEM, INC.
STOCK FOR MERIT INCREASE REPLACEMENT PLAN
(As amended on August 15, 1996)
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Purpose...................................................... 1
2. Effective Date and Term of this Plan ........................ 1
3. Administration of this Plan.................................. 1
4. Common Stock Subject to this Plan............................ 1
5. Eligible Persons............................................. 2
6. Purchase Price of Options ................................... 2
7. Option Term ................................................. 3
8. Option Type.................................................. 3
9. Non-Transferability of Options............................... 3
10. Exercise of Options.......................................... 3
11. Withholding Taxes on Option Exercise ........................ 4
12. Exercise of Options in the Event of a Change of Control...... 4
13. Termination of Employment.................................... 7
14. Amendments to this Plan...................................... 7
15. Miscellaneous Provisions .................................... 8
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<PAGE>
RYDER SYSTEM, INC.
STOCK FOR MERIT INCREASE REPLACEMENT PLAN
1. Purpose of this Plan
The purpose of the Ryder System, Inc. Stock for Merit Increase Replacement Plan,
as amended (this "Plan"), is to give key executives of Ryder System, Inc. (the
"Company") and its subsidiaries who are primarily responsible for the management
of the business of the Company the opportunity to receive stock option grants in
lieu of merit salary increases, thereby encouraging focus on the growth and
profitability of the Company and its Common Stock (as defined in Section 4).
2. Effective Date and Term of this Plan
This Plan shall become effective on May 5, 1995, subject to the approval of the
shareholders of the Company. Unless previously terminated in accordance with
Section 14 of this Plan, this Plan shall terminate on the close of business on
May 4, 2005, after which no Options (as defined in Section 4) shall be granted
under this Plan. Such termination shall not affect any Options granted prior to
such termination.
3. Administration of this Plan
This Plan shall be administered by the Compensation Committee (the "Committee")
of the Board of Directors of the Company which shall consist of not less than
three members of the Board of Directors, each of whom shall be a "disinterested
person" as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). Additionally, all members of the Committee shall be
"outside directors" as defined or interpreted for purposes of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all members of the Committee without a meeting, shall be the acts of the
Committee. The Committee shall have plenary authority, subject to the express
provisions of this Plan, to (i) select participants; (ii) determine the nature,
amount, time and manner of stock option grants made under this Plan; (iii)
interpret this Plan; (iv) prescribe, amend and rescind rules and regulations
relating to this Plan; and (v) make all other determinations deemed necessary or
advisable for the administration of this Plan.
4. Common Stock Subject to this Plan
<PAGE>
The shares of Common Stock of the Company, par value $.50 per share ("Common
Stock"), to be issued upon the exercise of an option to purchase Common Stock
granted in lieu of a merit salary increase (an "Option") may be made available
from the authorized but unissued Common Stock, or Common Stock purchased on the
open market or otherwise. Subject to the provisions of the next succeeding
paragraph, the maximum aggregate number of shares of Common Stock for which
Options may be granted under this Plan shall be 500,000 shares. If an Option
granted under this Plan expires or is terminated without having been exercised
in full, the unpurchased or forfeited shares or rights to receive shares shall
become available for grant to other executives. No executive shall be eligible
to receive any Options or series of Options covering, in the aggregate, more
than 300,000 shares during the term of this Plan.
If there shall be any change in the shares of Common Stock subject to this Plan
or any Option granted under this Plan as a result of merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or other change in
the corporate structure, adjustments may be made by the Committee, as it may
deem appropriate, in the aggregate number and kind of shares subject to this
Plan or to any outstanding Option, and in the terms and provisions of this Plan
and any Options granted hereunder, in order to reflect, on an equitable basis,
any such change in the shares contemplated by this paragraph. Any adjustment
made by the Committee pursuant to this paragraph shall be conclusive and binding
upon the grantee of an Option, the Company and any other related person.
5. Eligible Persons
Only persons who are members of the Company's senior leadership group, known as
the "Executive Committee", or other elected officers of the Company or its
subsidiaries selected by the Committee, shall be eligible to receive grants of
Options under this Plan in lieu of a merit salary increase. No grant shall be
made to any member of the Committee or any other non-employee director.
No executive selected to participate in this Plan may receive a grant of Options
unless the executive has made an election to receive Options in lieu of a merit
salary increase. No such election shall obligate the Company to grant a merit
salary increase or Options.
6. Purchase Price of Options
The purchase price for each share of Common Stock issuable under an Option shall
not be less than 100 percent (100%) of the Fair Market Value of a share of
Common Stock on the date of grant. "Fair Market Value" as used in this Plan
shall equal the mean of the high and low price of the Common Stock as reported
by the composite transaction reporting system for securities listed on the New
York Stock Exchange on the applicable date.
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7. Option Term
The term of each Option as determined by the Committee shall not exceed ten (10)
years from the date of grant and shall expire as of the last day of the
designated term, unless terminated earlier under the provisions of this Plan.
8. Option Type
Option grants may be either non-qualified stock options or incentive stock
options governed by Section 422(b) of the Code.
9. Non-Transferability of Options
No Option granted under this Plan shall be assignable or transferable by the
grantee except by will or the laws of descent and distribution. A grantee shall
forfeit any Option assigned or transferred, voluntarily or involuntarily, other
than as permitted under this Section. Each Option shall be exercised during the
grantee's lifetime only by the grantee or the grantee's guardian or legal
representative.
10. Exercise of Options
Except as provided in Sections 12 and 13, and subject to any limitations under
Section 16 of the 1934 Act, each Option shall be exercisable as follows: (i)
twenty percent (20%) of the shares of Common Stock subject to an Option on the
date of grant and (ii) the remainder of the shares subject to such Option in
four equal annual installments on the first, second, third and fourth
anniversary of the date of grant. The Committee may, at any time, provide for
the acceleration of installments or any part thereof.
Subject to the provisions of this Section 10, each Option may be exercised in
whole or, from time to time, in part with respect to the number of then
exercisable shares in any sequence desired by the grantee and without regard to
the date of grant of stock options under other plans of the Company; provided,
however, that any incentive stock option must be exercised in accordance with
Section 422(b) of the Code.
To exercise an Option, the grantee shall (i) give written notice to the Company
in form satisfactory to the Committee indicating the number of shares of Common
Stock which the grantee elects to purchase, (ii) deliver to the Company payment
of the full purchase price of the shares being purchased (A) in cash or a
certified or bank cashier's check payable to the order of the Company, or (B)
with the approval of the Committee, in shares of Common Stock having a
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Fair Market Value on the date of exercise equal to the purchase price, or (C)
a combination of the foregoing having an aggregate Fair Market Value equal to
such purchase price, and (iii) deliver to the Secretary of the Company such
written representations, warranties and covenants as the Company may require to
permit this Plan and any Options or shares of Common Stock granted or issued
hereunder to comply with any applicable blue sky or other federal or state
securities laws.
Except as provided in Sections 12 and 13, no Option may be exercised unless the
grantee, at the time of exercise, is an employee and has continuously been an
employee of the Company or any subsidiary since the grant of such Option.
A grantee shall not be deemed to have terminated his period of continuous employ
with the company or any subsidiary if he leaves the employ of the company or any
subsidiary for immediate reemployment with the company or any subsidiary.
A grantee of any Option shall not have any rights as a shareholder until the
close of business on the date on which the Option has been exercised.
11. Withholding Taxes on Option Exercise
Each grantee exercising an Option shall deliver to the Company payment in cash
or by check (as described in Section 10) equal to all federal, state and local
withholding taxes required to be collected by the Company in respect of the
exercise of such Option, and until such payment is made, the Company may, in its
discretion, retain all or a portion of the shares to be issued. Notwithstanding
the foregoing, to the extent permitted by law and pursuant to such rules as the
Committee may adopt, a grantee may authorize the Company to satisfy any such
withholding requirement by directing the Company to withhold from any shares to
be issued such number of shares as shall be sufficient to satisfy the
withholding obligation.
12. Exercise of Options in the Event of a Change of Control
Notwithstanding any other provision of this Plan, in the event of a Change of
Control (as defined below), each Option not previously exercised or expired
under the terms of this Plan shall become immediately exercisable in full and
shall remain exercisable to the full extent of the shares of Common Stock
available thereunder, regardless of any installment provisions applicable
thereto, for the remainder of its term, unless the grantee has been terminated
for Cause (as defined below) in which case the Options shall automatically
terminate.
Grantees of Options not otherwise exercised or expired under the terms of this
Plan may, in lieu of exercising, require the Company to purchase for cash all
such Options or portions thereof for a period of sixty (60) days following the
occurrence of a Change of Control at the Price specified below; provided that
Options subject to this purchase requirement held by grantees who are subject to
Section 16(b) of the 1934 Act must have been held for at least six (6) months.
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For purposes of this Section 12 and otherwise, the following definitions shall
apply:
A "Change of Control" shall be deemed to have occurred if:
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") becomes the beneficial owner,
directly or indirectly, of twenty percent (20%) or more of the combined voting
power of the Company's outstanding voting securities ordinarily having the right
to vote for the election of directors of the Company; provided, however, that
for purposes of this subparagraph (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition by any employee benefit plan
or plans (or related trust) of the Company and its subsidiaries and affiliates
or (B) any acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subparagraph (iii) of this Section 12;
or
(ii) the individuals who, as of August 18, 1995, constituted the Board of
Directors of the Company (the "Board" generally and as of August 18, 1995 the
"Incumbent Board") cease for any reason to constitute at least two-thirds (2/3)
of the Board, provided that any person becoming a director subsequent to August
18, 1995 whose election, or nomination for election, was approved by a vote of
the persons comprising at least two-thirds (2/3) of the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act)
shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board; or
(iii) there is a reorganization, merger or consolidation of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Company's outstanding Common
Stock and outstanding voting securities ordinarily having the right to vote for
the election of directors of the Company immediately prior to such Business
Combination beneficially own, directly or indirectly, more than fifty percent
(50%) of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities ordinarily
having the right to vote for the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns RSI or all
or substantially all of the Company's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Company's outstanding
Common Stock and outstanding voting securities ordinarily having the right to
vote for the election of directors of the Company, as the case may be, (B) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan or plans (or related trust) of the Company or such
corporation resulting from such Business Combination and their subsidiaries and
affiliates) beneficially owns, directly or indirectly, 20% or more of the
combined voting power of the then outstanding voting securities of the
corporation
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<PAGE>
resulting from such Business Combination and (C) at least two-thirds (2/3) of
the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(iv) there is a liquidation or dissolution of the Company approved by the
shareholders; or
(v) there is a sale of all or substantially all of the assets of the
Company.
If a Change of Control occurs and if a grantee's employment is terminated prior
to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the grantee that such termination of employment (A) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change of Control or (B) otherwise arose in connection with or in anticipation
of a Change of Control, a Change of Control shall be deemed to have
retroactively occurred on the date immediately prior to the date of such
termination of employment.
During the three (3) year period following a Change of Control, the term "cause"
as used in Section 13 [and Section 15] of this Plan [with respect to any Option]
shall mean (i) an act or acts of fraud, misappropriation or embezzlement on the
grantee's part which result in or are intended to result in the grantee's
personal enrichment at the expense of the Company, (ii) conviction of a felony,
(iii) conviction of a misdemeanor involving moral turpitude, or (iv) willful
failure to report to work for more than thirty (30) continuous days not
supported by a licensed physician's statement, all as determined only by a
majority of the Incumbent Board or the Committee, as the case may be.
"Price" shall mean, upon the occurrence of a Change of Control, the excess
of the highest of:
(i) the highest closing price of the Common Stock reported by the
composite transaction reporting system for securities listed on the New York
Stock Exchange within the sixty (60) days preceding the date of exercise;
(ii) the highest price per share of Common Stock included in a filing made
by any person or group referred to in subparagraph (i) of the definition of
Change of Control on any Schedule 13D pursuant to Section 13(d) of the 1934 Act
as paid within the sixty (60) days prior to the date of such report; and
(iii) the value of the consideration to be received by the holders
of Common Stock, expressed on a per share basis, in any transaction referred to
in subparagraph (iii), (iv) or (v) of the definition of Change of Control, with
all noncash consideration being valued in good faith by the Incumbent Board;
6
<PAGE>
over the purchase price per share at which the related Option is exercisable as
applicable, except that incentive stock options are limited to the spread
between the Fair Market Value of Common Stock on the date of exercise and the
purchase price per share at which the related Option is exercisable.
13. Termination of Employment
If the grantee's employment with the Company or any subsidiary terminates for
any reason other than as specified in the subsequent paragraphs of this Section
13, any Option shall terminate three (3) months after the later of (i) the date
of such termination or (ii) with respect to a non-qualified stock option, the
end of any severance period applicable to such grantee; provided, however, that
in the event of the death of the grantee during such period, such Option shall,
to the extent it was exercisable on the termination date or at the end of any
applicable severance period, be exercisable by the grantee's personal
representatives, heirs or legatees for a period of one (1) year commencing on
the date of the grantee's death and shall terminate at the expiration of such
period.
If the termination of employment is due to the grantee's death, any Option
shall, to the extent it was exercisable on the termination date, continue to be
exercisable by such grantee's legal representatives, heirs or legatees for the
term of such Option.
If the termination of employment is due to the grantee's retirement or
disability, any non-qualified stock option not previously exercised or expired
shall continue to vest and be exercisable during the three (3) year period
following the grantee's termination date, and to the extent it is exercisable at
the expiration of such three (3) year period, it shall continue to be
exercisable by such grantee or such grantee's legal representatives, heirs or
legatees for the term of such non-qualified stock option. Any incentive stock
option shall, to the extent it was exercisable on the termination date, continue
to be exercisable by such grantee or such grantee's legal representatives, heirs
or legatees for the term of such incentive stock option; provided, however, that
in order to qualify for the special tax treatment afforded by Section 421 of the
Code, incentive stock options must be exercised within the three (3) month
period commencing on the termination date (the exercise period shall be one (1)
year in the case of termination by reason of disability, within the meaning of
Section 22(e)(3) of the Code). Incentive stock options not exercised within such
three (3) month period shall be treated as non-qualified stock options.
If a grantee is terminated for cause, all Options with respect to such grantee
shall automatically terminate as of the grantee's termination date.
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<PAGE>
14. Amendments to this Plan
The Committee may at any time (i) terminate this Plan or (ii) modify or amend
this Plan in any respect, except that, to the extent required to maintain the
qualification of this Plan under Section 16 of the 1934 Act, or as otherwise
required to comply with applicable law or the regulations of any stock exchange
on which the Common Stock is listed, the Committee may not, without
shareholders' approval, (A) materially increase the benefits accruing to
participants under this Plan; (B) materially increase the number of securities
which may be issued under this Plan; or (C) materially modify the requirements
as to eligibility for participation in this Plan. Should this Plan require
amendment to maintain full legal compliance because of rules, regulations,
opinions or statutes issued by the Securities and Exchange Commission, the U.S.
Department of the Treasury or any other governmental or governing body, then the
Committee or the Board may take whatever action, including but not limited to
amending or modifying this Plan, is necessary to maintain such compliance. The
termination or any modification or amendment of this Plan shall not, without the
consent of any grantee involved, adversely affect rights under an Option
previously granted to such grantee.
15. Miscellaneous Provisions
(a) Service on the Committee shall constitute service as a director of the
Company and members of the Committee shall be entitled to indemnification,
advancement of expenses and reimbursement as directors of the Company pursuant
to its Restated Articles of Incorporation, By-Laws, resolutions of the Board of
Directors or otherwise.
(b) No Employee shall have any claim or right to be granted an award under this
Plan, nor having been selected as a grantee for one year, any right to be a
grantee in any other year. Neither this Plan nor any action taken hereunder
shall be construed as giving any grantee any right to be retained in the employ
of the Company and the Company expressly reserves its right at any time to
dismiss any grantee with or without cause.
(c) With respect to grantees subject to Section 16 of the 1934 Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act. To the extent any provision of this
Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
Moreover, in the event this Plan does not include a provision required by Rule
16b-3 to be stated herein, such provision (other than one relating to
eligibility requirements, or the price and amount of Options) shall be deemed
automatically to be incorporated by reference into this Plan insofar as grantees
subject to Section 16 are concerned.
8
EXHIBIT 10.9(b)
RYDER SYSTEM, INC
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of this 21st day of February, 1997, between Ryder
System, Inc., a Florida corporation ("RSI"), and [Name] (the "Grantee");
WITNESSETH:
WHEREAS, the Board of Directors of RSI has adopted and the shareholders of RSI
have approved the Ryder System, Inc. Stock for Merit Increase Replacement Plan,
as amended (the "Plan"), which provides for the grant of non-qualified stock
options ("Non-qualified Stock Options") in lieu of merit salary increases to key
executive employees of the Company; and
WHEREAS, the Grantee is a key executive employee and has been selected by the
Compensation Committee of the Board of Directors of RSI (the "Committee") to
receive Non-qualified Stock Options under the Plan;
NOW, THEREFORE, in consideration of the premises, RSI and the Grantee agree as
follows:
I. NON-QUALIFIED STOCK OPTION
GRANT OF OPTION Subject to the limitations and other terms and conditions set
forth in this Agreement and the Plan, the Committee grants to the Grantee as of
February 21, 1997, a Non-qualified Stock Option to purchase an aggregate of
[NUMBER] shares of RSI's common stock, par value $.50 per share (the "Common
Stock"), at a price of $31.50 per share of Common Stock, the Fair Market Value
on the date of grant.
LIMITATIONS ON EXERCISE OF OPTION Subject to the limitations and other terms and
conditions set forth in this Agreement and the Plan, the Non-qualified Stock
Option shall be exercisable in installments on or before FEBRUARY 20, 2007, the
expiration of the term of the Non-Qualified Stock Option, as follows:
(i) 20% of the shares of Common Stock subject to the Non-qualified Stock
Option effective immediately;
(ii) 20% of the shares of Common Stock subject to the Non-qualified Stock
Option on or after FEBRUARY 21, 1998;
(iii) 20% of the shares of Common Stock subject to the Non-qualified Stock
Option on or after FEBRUARY 21, 1999;
(iv) 20% of the shares of Common Stock subject to the Non-qualified Stock
Option on or after FEBRUARY 21, 2000;
<PAGE>
(v) and the final 20% of the shares of Common Stock subject to the
Non-qualified Stock Option on or after FEBRUARY 21, 2001.
EXERCISE AND PAYMENT OF OPTION Subject to the limitations and other terms and
conditions set forth in this Agreement and the Plan, the Non-qualified Stock
Option may be exercised in whole or, from time-to-time, in part with respect to
the number of then exercisable shares by delivering written notice to RSI
addressed to the Controller of RSI specifying the number of shares of Common
Stock the Grantee then elects to purchase under the Non-qualified Stock Option,
together with the full purchase price of the shares being purchased in cash or a
certified or bank cashier's check payable to the order of RSI, or in shares of
Common Stock having a Fair Market Value on the date of exercise equal to the
purchase price, or a combination of the foregoing having an aggregate Fair
Market Value equal to the purchase price. As promptly as practicable after any
such exercise, RSI will deliver to the Grantee certificates for the number of
shares of Common Stock with respect to which the Non-qualified Stock Option has
been exercised, issued in the name of the Grantee.
EXERCISE AND PAYMENT UPON A CHANGE OF CONTROL Subject to the limitations and
other terms and conditions set forth in this Agreement and the Plan:
(i) Notwithstanding any other provision of this Agreement, pursuant to
Section 12 of the Plan, in the event of a Change of Control, the Non-qualified
Stock Option granted under Section I of this Agreement, to the extent not
previously exercised or expired under the terms of this Agreement and the Plan,
shall become immediately exercisable in full and shall remain exercisable to the
full extent of the shares of Common Stock available thereunder, regardless of
any installment provisions applicable thereto, for the remainder of its term,
unless the Grantee has been terminated for Cause, in which case the
Non-qualified Stock Option shall automatically terminate.
(ii) The Grantee may, in lieu of exercising, require RSI to purchase for
cash all or any portion of the Non-qualified Stock Option granted under Section
I of this Agreement, which is not otherwise exercised or expired under the terms
of this Agreement and the Plan, for a period of sixty days following the
occurrence of a Change of Control at the Price upon a Change of Control
specified below.
PRICE UPON A CHANGE OF CONTROL Subject to the limitations and other terms and
conditions set forth in this Agreement and the Plan, upon the occurrence of a
Change of Control, the Price of the Non-qualified Stock Option or portions
thereof shall be the excess of the highest of:
(i) the highest closing price of the Common Stock reported by the
composite transaction reporting system for securities listed on the New York
Stock Exchange within the sixty days preceding the date of exercise;
(ii) the highest price per share of Common Stock included in a filing
made by any Person, but excluding any employee benefit plan or plans (or related
trust) of RSI and its subsidiaries and affiliates, who becomes the beneficial
owner, directly or indirectly, of twenty percent or more of the combined voting
power of RSI's outstanding voting securities ordinarily
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having the right to vote for the election of directors of RSI, on any Schedule
13D pursuant to Section 13(d) of the 1934 Act as paid within the sixty days
prior to the date of such report; and
(iii) the value of the consideration to be received by the holders of
Common Stock, expressed on a per share basis, in any Business Combination
affecting RSI, any liquidation or dissolution of RSI approved by the
shareholders or any sale of all or substantially all of the assets of RSI, with
all noncash consideration being valued in good faith by the Incumbent Board;
over the purchase price per share of Common Stock at which the related
Non-qualified Stock Option is exercisable, as applicable.
II. GENERAL
TRANSFERABILITY OF OPTIONS No Options shall be assignable or transferable by the
Grantee except by will or the laws of descent and distribution. During the
lifetime of the Grantee, an Option shall be exercisable only by the Grantee or
the Grantee's guardian or legal representative.
NOTICES All notices provided for in this Agreement or the Plan shall be in
writing and shall be deemed to have been duly given if delivered in person or
mailed by registered mail, return receipt requested:
(a) If to RSI, at Ryder System, Inc., P. O. Box 020816, Miami,
Florida 33102-0816, Attention: Controller; and
(b) If to the Grantee, at the Grantee's business address or address
appearing in the payroll records of RSI; or
(c) At such other addresses as may be furnished to RSI or the Grantee
in accordance with this paragraph.
DEFINITIONS AND INTERPRETATION Capitalized terms not otherwise defined in this
Agreement are defined as in the Plan. This Agreement and the grant, exercise,
adjustment, modification, cancellation and termination of the Non-qualified
Stock Option and the issuance of shares of Common Stock subject thereto are
subject in all respects to the terms of the Plan and in the event that any
provision of this Agreement shall be inconsistent with the terms of the Plan,
then the terms of the Plan shall govern. The Committee shall have plenary
authority, subject to the express provisions of the Plan, to interpret this
Agreement and the Plan and to make all determinations deemed necessary or
advisable for the administration of the Plan. The Committee's interpretations
and determinations shall be conclusive.
ACKNOWLEDGEMENT The Grantee acknowledges that he/she has read the entire Plan
including the provisions thereof relating to termination of employment and
Change of Control. Additionally, Grantee acknowledges that this Agreement is not
an employment agreement between the Grantee and RSI, and RSI and the Grantee
each has the right to terminate the
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Grantee's employment at any time for any reason whatsoever, unless there is a
written employment agreement to the contrary.
GOVERNING LAW This Agreement shall be construed and enforced in accordance with,
and governed by, the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Attest: Ryder System, Inc. ("RSI")
By:____________________________________ By:________________________________
Yasmine B. Zyne Stephen N. Karp
Assistant Secretary Vice President
___________________________________
GRANTEE
___________________________________
Social Security Number
4
EXHIBIT 10.9(c)
RYDER SYSTEM, INC.
COMBINED NON-QUALIFIED STOCK OPTION
AND
LIMITED STOCK APPRECIATION RIGHT
AGREEMENT
THIS AGREEMENT, made as of this 1st day of October, 1997, between Ryder System,
Inc., a Florida corporation ("RSI"), and [name] (the "Grantee");
WITNESSETH:
WHEREAS, the Board of Directors of RSI has adopted and the shareholders of RSI
have approved the Ryder System, Inc. 1995 Stock Incentive Plan, as amended (the
"Plan"), which provides for the issuance of (i) Non-qualified Stock Options
("Non-qualified Stock Options") to purchase shares of Common Stock and (ii)
Limited Stock Appreciation Rights ("Limited SARs") to key executive Employees of
the Company; and
WHEREAS, the Grantee is a key executive Employee and has been selected by the
Compensation Committee of the Board of Directors of RSI (the "Committee") to
receive Non-qualified Stock Options and Limited SARs under the Plan;
NOW, THEREFORE, in consideration of the premises, RSI and the Grantee agree as
follows:
I. NON-QUALIFIED STOCK OPTION
GRANT OF OPTION Subject to the limitations and other terms and conditions set
forth in this Agreement and the Plan, the Committee grants to the Grantee as of
October 1,1997 a Non-qualified Stock Option to purchase an aggregate of _______
shares of RSI's Common Stock, par value $.50 per share (the "Shares"), at a
price of $36.0625 per Share, the Fair Market Value on the date of grant.
LIMITATIONS ON EXERCISE OF OPTION Subject to the limitations and other terms and
conditions set forth in this Agreement and the Plan, the Non-qualified Stock
Option shall be exercisable in installments on or before September 30, 2007 as
follows:
(i) None of the Shares subject to the Non-qualified Stock Option for a
period of one year from the date of grant;
(ii) 33 1/3% of the Shares subject to the Non-qualified Stock Option on
or after October 1, 1998;
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(iii) 33 1/3% of the Shares subject to the Non-qualified Stock Option on
or after October 1,1999;
(iv) the final 33 1/3% of the Shares subject to the Non-qualified Stock
Option on or after October 1,2000.
Subject to the foregoing and the provisions of the Plan, any installment portion
of the Non-qualified Stock Option that becomes exercisable shall thereafter
accumulate and be exercisable at any time on or before the expiration of the
term of the Non-qualified Stock Option on September 30, 2007.
EXERCISE AND PAYMENT OF OPTION Subject to the limitations and other terms and
conditions set forth in this Agreement and the Plan, the Non-qualified Stock
Option, to the extent then exercisable, may be exercised in whole or in part
from time-to-time by delivering written notice to RSI addressed to the
Controller of RSI specifying the number of Shares the Grantee then elects to
purchase under the Non-qualified Stock Option, together with the full purchase
price of the Shares being purchased in cash or a certified or bank cashier's
check payable to the order of RSI, or in Shares having a Fair Market Value on
the date of exercise equal to the purchase price, or a combination of the
foregoing having an aggregate Fair Market Value equal to the purchase price. As
promptly as practicable after any such exercise, RSI will deliver to the Grantee
certificates for the number of Shares with respect to which the Non-qualified
Stock Option has been exercised, issued in the name of the Grantee. The exercise
of a Non-qualified Stock Option shall reduce on a one-for-one basis the number
of Shares subject to the related Limited SAR granted under Section II of this
Agreement.
EXERCISE AND PAYMENT UPON A CHANGE OF CONTROL Subject to the limitations and
other terms and conditions set forth in this Agreement and the Plan:
(i) Notwithstanding any other provision of this Agreement, pursuant to
Section 7(h) of the Plan, unless otherwise determined by the Committee prior to
a Change of Control, in the event of a Change of Control, the Non-qualified
Stock Option granted under Section I of this Agreement, to the extent not
previously exercised or expired under the terms of this Agreement and the Plan,
shall become immediately exercisable in full and shall remain exercisable to the
full extent of the Shares available thereunder, regardless of any installment
provisions applicable thereto, for the remainder of its term, unless Section
14(a) of the Plan applies or the Grantee has been terminated for cause, in which
case the Non-qualified Stock Option shall automatically terminate as of the
Incumbent Board's determination pursuant to Section 14(a) of the Plan or the
Grantee's Termination Date, as appropriate.
(ii) If the Committee so determines prior to or during the thirty day
period following the occurrence of a Change of Control, the Grantee may, in lieu
of exercising, require RSI to purchase for cash all or any portion of the
Non-qualified Stock Option granted under Section I of this Agreement, which is
not otherwise exercised or expired under the terms of this Agreement and the
Plan as to which no Limited SAR is then exercisable, for a period of sixty days
following the occurrence of a Change of Control at the Price upon a Change of
Control specified below.
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PRICE UPON A CHANGE OF CONTROL Subject to the limitations and other terms and
conditions set forth in this Agreement and the Plan, upon the occurrence of a
Change of Control, the Price of the Limited SAR and the Non-qualified Stock
Option or portions thereof as to which no Limited SAR is then exercisable, shall
be the excess of the highest of:
(i) the highest closing price of the Common Stock reported by the
composite transaction reporting system for securities listed on the New York
Stock Exchange within the sixty days preceding the date of exercise;
(ii) the highest price per share of Common Stock included in a filing
made by any Person, but excluding any employee benefit plan or plans (or related
trust) of RSI and its Subsidiaries and affiliates, who becomes the beneficial
owner, directly or indirectly, of twenty percent or more of the combined voting
power of RSI's outstanding voting securities ordinarily having the right to vote
for the election of directors of RSI, on any Schedule 13D pursuant to Section
13(d) of the 1934 Act as paid within the sixty days prior to the date of such
report; and
(iii) the value of the consideration to be received by the holders of
Common Stock, expressed on a per Share basis, in any Business Combination
affecting RSI, any liquidation or dissolution of RSI or any sale of all or
substantially all of the assets of RSI, with all noncash consideration being
valued in good faith by the Incumbent Board;
over the purchase price per Share at which the related Non-qualified Stock
Option is exercisable, as applicable.
II. LIMITED STOCK APPRECIATION RIGHT
GRANT OF LIMITED SAR Subject to the limitations and other terms and conditions
set forth in this Agreement and the Plan, the Committee grants to the Grantee as
of October 1, 1997 a Limited SAR with respect to all Shares subject to the
related Non-qualified Stock Option granted under Section I of this Agreement.
Such Limited SAR shall be exercisable only in the event of a Change of Control
and only if the Grantee is subject, in the opinion of counsel to RSI, to Section
16(b) of the 1934 Act with respect to RSI at the time of the Change of Control.
The Limited SAR is the right to receive an amount (the "Limited SAR Spread")
equal to the product computed by multiplying (i) the Price upon a Change of
Control specified in Section I above by (ii) the number of Shares with respect
to which such Limited SAR is being exercised.
LIMITATIONS ON EXERCISE OF LIMITED SAR Subject to the limitations and other
terms and conditions set forth in this Agreement and the Plan, the Limited SAR
shall be exercisable only if and to the extent that the related Non-qualified
Stock Option is exercisable, but no later than September 30, 2007, the
expiration date of the related Non-qualified Stock Option. The Limited SAR may
be exercised only during the sixty day period commencing after the occurrence of
a Change of Control.
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EXERCISE AND PAYMENT OF LIMITED SAR Subject to the limitations and other terms
and conditions set forth in this Agreement and the Plan, the Limited SAR may be
exercised by delivering a written notice to RSI addressed to the Controller of
RSI specifying the number of Shares with respect to which the Grantee is
exercising the Limited SAR. As promptly as practicable after any such exercise,
RSI will deliver to the Grantee an amount in cash equal to the Limited SAR
Spread. The exercise of a Limited SAR shall reduce the number of Shares subject
to the related Non-qualified Stock Option on a one-for-one basis.
III. GENERAL
TRANSFERABILITY OF AWARDS No Awards or any rights or interests therein shall be
assignable or transferable by the Grantee except by will or the laws of descent
and distribution. During the lifetime of the Grantee, an Award shall be
exercisable only by the Grantee or the Grantee's guardian or legal
representative.
NOTICES All notices provided for in this Agreement or the Plan shall be in
writing and shall be deemed to have been duly given if delivered in person or
mailed by registered mail, return receipt requested:
(a) If to RSI, at Ryder System, Inc., P. O. Box 020816, Miami,
Florida 33102-0816, Attention: Controller; and
(b) If to the Grantee, at the Grantee's business address or address
appearing in the payroll records of RSI; or
(c) At such other addresses as may be furnished to RSI or the Grantee
in accordance with this paragraph.
DEFINITIONS AND INTERPRETATION Capitalized terms not otherwise defined in this
Agreement are defined as in the Plan. This Agreement and the grant, exercise,
adjustment, modification, cancellation and termination of the Non-qualified
Stock Option and the Limited SAR, the issuance of Shares subject thereto and the
payment of cash thereunder are subject in all respects to the terms of the Plan
and in the event that any provision of this Agreement shall be inconsistent with
the terms of the Plan, then the terms of the Plan shall govern. The Committee
shall have plenary authority to interpret this Agreement and the Plan and to
make all determinations deemed necessary or advisable for the administration of
the Plan. The Committee's interpretations and determinations shall be
conclusive.
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ACKNOWLEDGEMENT The Grantee acknowledges that he/she has read the entire Plan
including the provisions thereof relating to termination of employment and
Change of Control. Additionally, Grantee acknowledges that this Agreement is not
an employment agreement between the Grantee and RSI, and RSI and the Grantee
each has the right to terminate the Grantee's employment at any time for any
reason whatsoever, unless there is a written employment agreement to the
contrary.
GOVERNING LAW This Agreement shall be construed and enforced in accordance with,
and governed by, the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Attest: RSI
By:____________________________________ By:________________________________
Edward R. Henderson Stephen N. Karp
Assistant Secretary Vice President
Compensation & Benefits
___________________________________
GRANTEE
___________________________________
Social Security Number
5
EXHIBIT 10.10
RYDER SYSTEM, INC.
DEFERRED COMPENSATION PLAN
This Ryder System, Inc. Deferred Compensation Plan (the "Plan") is amended
and restated as of November 3, 1997. The Plan is established and maintained by
Ryder System, Inc. ("RSI") solely for the purpose of providing specified
benefits to the members of the Board of Directors of RSI and a select group of
management and highly compensated Employees who contribute materially to the
continued growth, development and future business success of RSI, and its
subsidiaries, that elect to sponsor this Plan. This Plan shall be unfunded for
tax purposes and for purposes of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall have the meanings hereinafter set
forth:
1.1. "ACCOUNTING DATE" means the last day of each calendar month and such
other date or dates as the Committee may designate from time to time as an
Accounting Date.
1.2. "ACCOUNTING PERIOD" means each period beginning on the day following
an Accounting Date and ending on the following Accounting Date.
1.3. "AFFILIATE" means any Employer, and any member of a controlled group
of corporations, a group of trades or businesses under common control, an
affiliated service group of which any Employer is a member or any other entity
required to be aggregated with the Employer pursuant to regulations under
Section 414(o) of the Code. For purposes hereof: (i) a "controlled group of
corporations" shall mean a controlled group of corporations as defined in
Section 1563(a) of the Code, determined without regard to Sections 1563(a)(4)
and (e)(3)(c) thereof, (ii) a "group of trades or businesses under common
control" shall mean a group of trades or businesses under common control as
defined in the regulations promulgated under Section 414(c) of the Code; and
(iii) an "affiliated service group" shall mean an affiliated service group as
defined in Section 414(m) of the Code.
1.4. "BENEFICIARY" means the person or persons designated by a
Participant, upon such forms as shall be provided by the Committee, to receive
payments of the vested portion of the Participant's Account after the
Participant's death. If the Participant shall fail to designate a Beneficiary,
or if for any reason such designation shall be ineffective, or if such
Beneficiary shall predecease the Participant or die simultaneously with him,
then the Beneficiary shall be, in the following order of preference:
(i) the Participant's surviving spouse, or
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(ii) the Participant's estate.
1.5. "BOARD" means the Board of Directors of the Company.
1.6. "CHANGE OF CONTROL" shall be deemed to have occurred if:
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) (a "Person") becomes the beneficial owner, directly or indirectly,
of twenty percent (20%) or more of the combined voting power of RSI's
outstanding voting securities ordinarily having the right to vote for the
election of directors of RSI; provided, however, that for purposes of this
subparagraph (i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition by any employee benefit plan or plans (or related
trust) of RSI and its subsidiaries and affiliates or (B) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B) and
(C) of subparagraph (iii) of this Section 1.6; or
(ii) the individuals who, as of August 18, 1995, constituted the
Board of Directors of RSI (the "Board" generally and as of August 18, 1995 the
"Incumbent Board") cease for any reason to constitute at least two-thirds (2/3)
of the Board, provided that any person becoming a director subsequent to August
18, 1995 whose election, or nomination for election, was approved by a vote of
the persons comprising at least two-thirds (2/3) of the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act)
shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board; or
(iii) there is a reorganization, merger or consolidation of RSI (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of RSI's outstanding Company Stock and
outstanding voting securities ordinarily having the right to vote for the
election of directors of RSI immediately prior to such Business Combination
beneficially own, directly or indirectly, more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities ordinarily having the
right to vote for the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns RSI or all
or substantially all of RSI's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of RSI's outstanding Company
Stock and outstanding voting securities ordinarily having the right to vote for
the election of directors of RSI, as the case may be, (B) no Person (excluding
any corporation resulting from such Business Combination or any employee
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benefit plan or plans (or related trust) of RSI or such corporation resulting
from such Business Combination and their subsidiaries and affiliates)
beneficially owns, directly or indirectly, 20% or more of the combined voting
power of the then outstanding voting securities of the corporation resulting
from such Business Combination and (C) at least two-thirds (2/3) of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) there is a liquidation or dissolution of RSI approved by the
shareholders; or
(v) there is a sale of all or substantially all of the assets of
RSI.
If a Change of Control occurs and if a Participant's employment is terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Participant that such termination of employment (A) was at
the request of a third party who has taken steps reasonably calculated to effect
a Change of Control or (B) otherwise arose in connection with or in anticipation
of a Change of Control, a Change of Control shall be deemed to have
retroactively occurred on the date immediately prior to the date of such
termination of employment.
1.7. "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any regulations relating thereto.
1.8. "COMMITTEE" means the Committee appointed by the Board to administer
the Savings Plan in accordance with Article X of the Savings Plan or when
applicable, the person to whom the Committee has delegated authority pursuant to
Article X of the Savings Plan for the matter in question.
1.9. "COMPANY" means Ryder System, Inc., a Florida corporation, or any
successor corporation or other entity resulting from a merger or consolidation
into or with the Company or a transfer or sale of substantially all of the
assets of the Company.
1.10. "COMPANY STOCK" means the common stock of the Company, par value
$.50, which is readily traceable on an established securities market.
1.11. "COMPENSATION" means (i) in the case of an Employee, the sum of the
total of all amounts paid to a Participant by an Employer as salary (including
commissions) or bonuses for personal services and any Savings Plan Contributions
or Tax-Deferred Contributions made by the Employer on behalf of a Participant
for the Plan Year and any other amounts earned by the Participant for the Plan
Year but that are deferred under any other plan or arrangement maintained by the
Employer, or (ii) in the case of a Director, the Director's fees including the
Director's annnual cash retainer, committee retainer and per diem meeting fees
earned by the Director.
1.12. "DIRECTOR" means a member of the Board.
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1.13. "DISABILITY" means a Participant's inability to engage in any
substantial gainful activity by reason of any medically determined physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months,
as determined in a uniform and non-discriminatory manner by the Committee after
requiring any medical examinations by a physician or reviewing any medical
evidence which the Committee considers necessary, and which results in the
Participant's Separation from Employment.
1.14. "ELIGIBLE EMPLOYEE" means any Employee who is (i) employed by the
Employer, (ii) designated by the Committee to be eligible to participate in the
Plan, and (iii) is part of a select group of management or highly compensated
employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA, and any regulations relating thereto.
1.15. "EMPLOYEE" means any employee of (i) the Company or (ii) any other
entity that is an Employer as defined in the Savings Plan.
1.16. "EMPLOYER" means (i) the Company and (ii) any other entity that is
an Employer as defined in the Savings Plan.
1.17. "INVESTMENT FUNDS" means those investment options that shall from
time to time be made available as investment options under the Plan, as
determined by the Committee.
1.18. "LEAVE OF ABSENCE" means an Employee's leave of absence from active
employment with the Company or an Affiliate because of military service, illness
which does not constitute a Disability, educational pursuits, services as a
juror, or temporarily with a government agency, or any other leave of absence,
if (i) such leave of absence is approved by the Company or an Affiliate that
employs the Employee, and (ii) upon termination of any such leave of absence,
such Employee promptly returns or has returned to the employ of the Company or
an Affiliate, without employment (other than military service) elsewhere in the
meantime except with the consent of the Company or an Affiliate. The Company or
an Affiliate shall determine the first and last days of any Leave of Absence
that it approves.
1.19. "MATCHING CONTRIBUTIONS" means the matching contributions credited
to the Participant's Account in accordance with Section 3.2 of the Plan.
1.20. "MATCHING CONTRIBUTIONS ACCOUNT" means the account maintained by the
Company under the Plan for a Participant that is credited with the Participant's
Matching Contributions, and any gains or losses allocable thereto.
1.21. "PARTICIPANT" means a Director or an Eligible Employee of the
Employer who elects to participate in the Plan.
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1.22. "PARTICIPANT'S ACCOUNT" means the total amount credited to the
account maintained in the Plan in accordance with the provisions of the Plan for
each Participant, which represents his total proportionate interest of all
accounts under the Plan as of any Accounting Date, and which consists of his
Tax-Deferred Contributions Account and his Matching Contributions Account.
1.23. "PLAN" means the Ryder System, Inc. Deferred Compensation Plan.
1.24. "PLAN YEAR" means the calendar year.
1.25. "RETIREMENT" means either (i) in the case of an Employee,
termination of employment from an Employer at or after Retirement Age or (ii) in
the case of a Director, retirement as a member of the Board.
1.26. "RETIREMENT AGE" means the earlier of (i) the date on which a
Participant attains age 65, and (ii) the date on which a Participant has both
(a) attained age 55 and (b) completed at least 10 years of Service. For purposes
of this provision, Service shall mean that period of an Employee's continuous
uninterrupted employment with an Employer and any Affiliate, and with any
predecessor businesses of the Employer or an Affiliate, conducted as
corporations, partnerships, or proprietorships, from the Employee's last date of
hire to the date of termination of his employment for any reason; provided
however, that the employment of an Employee, who immediately before his current
employment was employed by a predecessor or acquired business continuously up to
the date of its merger with or acquisition by the Employer or an Affiliate,
shall include only that part of his employment for said business which has
occurred after the date fixed for this purpose by the Company and provided that
the same date is uniformly fixed for this purpose as to all of the employees of
a given predecessor or acquired business. An Employee may work simultaneously
for more than one Employer and Affiliate, but the total period of his employment
shall not be increased by reason of such simultaneous employment.
1.27. "SAVINGS PLAN" means the Ryder System, Inc. Employee Savings Plan A,
established effective January 1, 1984, and as amended from time to time, and the
Ryder System, Inc. Employee Savings Plan B, established effective January 1,
1993, and as amended from time to time, and each successor or replacement
salaried employees' cash or deferred arrangement.
1.28. "SAVINGS PLAN LIMITATIONS" means those limitations applicable to the
Savings Plan imposed by (i) Section 402(g) of the Code (ii) Section 415 of the
Code, (iii) Section 401(a)(17) of the Code, or (iv) any other limitations
imposed under the Code on contributions under the Savings Plan.
1.29. "SAVINGS PLAN MATCHING CONTRIBUTIONS" means the total of all
Matching Contributions made by the Employer for the benefit of a Participant
under and in accordance with the terms of the Savings Plan.
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1.30. "SAVINGS PLAN TAX-DEFERRED CONTRIBUTIONS" means the Tax Deferred
Contributions made by the Employer for the benefit of a Participant under and in
accordance with the terms of the Savings Plan.
1.31. "SEPARATION FROM EMPLOYMENT" means a discontinuance of the
Participant's employment relationship with the Company and its Affiliates due to
Retirement, Disability, death, or other termination of employment (voluntary or
involuntary). For purposes of this provision, the employment relationship with
the Company and its Affiliates of a Participant entitled to accrued vacation
time and/or severance pay after he ceases to perform services for the Company
and its Affiliates shall be deemed to terminate upon the date his accrued
vacation time, if any, expires, or if the Participant is entitled to severance
pay, then upon the last date on which the Participant is entitled to receive
payment of such severance pay from the Company or any Affiliate. The fact that
an Employee who is a Participant ceases to elect to have any Tax-Deferred
Contributions credited to his Account under the Plan shall not constitute a
Separation from Employment, and a Participant's absence from active employment
due to military service or Leave of Absence shall not constitute a Separation
from Employment.
1.32. "TAX-DEFERRED CONTRIBUTIONS" means the compensation reduction
contributions credited to the Participant's Account under Section 3.1 of the
Plan.
1.33. "TAX-DEFERRED CONTRIBUTIONS ACCOUNT" means the account maintained by
the Company under the Plan for a Participant that is credited with the
Participant's Tax-Deferred Contributions, and any gains or losses allocable
thereto.
ARTICLE II
ELIGIBILITY
2.1. ELIGIBILITY. An Employee that becomes an Eligible Employee as of
January 1, 1997 and all Directors as of January 1, 1997 shall be eligible to
participate in the Plan on January 1, 1997. Any other Employee or Director shall
be eligible to participate on the January 1 coincident with or immediately
following the date as of which he becomes an Eligible Employee or a Director.
ARTICLE III
CONTRIBUTIONS AND VESTING
3.1. TAX-DEFERRED CONTRIBUTIONS. (i) Each Participant who is an Eligible
Employee, so long as he remains a Participant, may elect (on a form furnished by
the Committee and in accordance with Committee rules) to reduce and defer
receipt pursuant to this Plan of his Compensation by an amount equal to the
excess of (i) a minimum of 1% and a maximum of 100% of his Compensation, over
(ii) the amount of his Savings Plan Tax-Deferred Contributions for the Plan Year
after taking into account the Savings Plan Limitations. The amount of deferral
so elected shall be applied against
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and reduce the Participant's (x) salary (including commissions), (y) bonuses, or
(z) salary (including commissions) and bonuses, earned during the Plan Year as
elected by the Participant and as shall be determined by the Committee.
(ii) Each Participant who is a Director, so long as he remains a
Participant, may elect (on a form furnished by the Committee and in accordance
with Committee rules) to reduce and defer receipt pursuant to this Plan of his
Compensation by an amount equal to a minimum of 1% and a maximum of 100% of his
Compensation.
(iii) Participant Election and Enrollment Forms are effective on a
Plan Year basis, and must be filed before the beginning of the Plan Year to
which they relate. Participant Election and Enrollment Forms may not be amended
or revoked after the beginning of the Plan Year. The Employer shall withhold, by
payroll deduction, the Compensation deferred pursuant to this Section 3.1 from
the current compensation payments of a Participant and credit such withheld
amount to a Participant's Tax-Deferred Contributions Account under the Plan.
3.2. MATCHING CONTRIBUTION. For Participant's who are Eligible Employees,
and specifically excluding Participants who are Directors, the Employer shall
credit to the Participant's Matching Contributions Account of each such
Participant who elects to make a Tax-Deferred Contribution for the Plan Year an
amount equal to the excess, if any, of:
(i) the amount of the Savings Plan Matching Contribution that would
have been credited to such Participant's Account under the Savings Plan if the
Tax-Deferred Contribution had been made into the Savings Plan and the Savings
Plan Limitations were not taken into account thereunder, over
(ii) the Savings Plan Matching Contributions actually allocated to
such Participant's Account under the Savings Plan for the Plan Year.
Each Matching Contribution for each Participant shall be credited to the
Participant' s Account as of the end of the Accounting Period for which the
Tax-Deferred Contribution is withheld, or as soon as practicable thereafter.
Participants who are Directors shall not be credited with Matching Contributions
under this Section 3.2.
3.3. VESTING.
(i) A Participant's interest in his Tax-Deferred Contributions
Account shall be 100% nonforfeitable at all times. A Participant's interest in
his Matching Contribution Account shall become non-forfeitable and vest in
accordance with the following schedule, based upon the number of the
Participant's Years of Service as determined under the Savings Plan.
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NUMBER OF YEARS VESTED PERCENTAGE
OF SERVICE OF ACCOUNT
--------------- -----------------
Less than 1 0%
1 to 2 25 %
2 to 3 50 %
3 to 4 75 %
4 or more 100%
Notwithstanding the foregoing, a Participant's vested percentage shall be 100%
(a) if the Participant's employment with the Employer terminates due to
Retirement, or by reason of the Participant's death or Disability, or (b) in the
event that a Change of Control shall occur while the Participant is an Employee
of the Employer or an Affiliate.
(ii) The nonvested portion of a Participant's Account that is
forfeited shall not be allocated to the Participant's Account of any other
Participant.
ARTICLE IV
INVESTMENT OF PARTICIPANT'S ACCOUNTS
4.1. INVESTMENT. Amounts credited to a Participant's Account shall be
treated as if they were actually invested in the Investment Funds selected by
the Participant in accordance with the Plan, and shall be credited with gains
and losses allocable thereto at such times and in such manner as shall be
determined by the Committee. Each Director and Eligible Employee upon becoming a
Participant shall elect on the Participant Election and Enrollment Form the
portion of the Participant's Account, in any whole percentage multiples (or in
such other proportions as the Committee may from time to time determine), that
are to be treated as if invested in each of the Investment Funds. A Participant
may, at such times and in such manner as shall be permitted by the Committee,
change such election as to the investment of his Participant's Account.
ARTICLE V
DISTRIBUTIONS
5.1. FIXED DATE DISTRIBUTION.
(i) On the Participant Election and Enrollment Form, a Participant
may make an irrevocable election to receive a lump sum payment of all or a
portion of the deferral amount elected on such Participant Election and
Enrollment Form. Provided, however, that each such Fixed Date Distribution shall
be paid in lump sum and shall be paid no less than 1 day and no more than 60
days after the last day of any Plan Year designated by the Participant that is
at least two Plan Years after the Plan Year in which such deferral amount is
actually deferred.
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(ii) Should an event occur that triggers a benefit under Section
5.2, any deferral amounts that are subject to a Fixed Date Distribution election
under this Section 5.1 shall not be paid in accordance with Section 5.1 but
shall be paid in accordance with the other applicable Section.
5.2 DISTRIBUTIONS FOR SEPARATION FROM EMPLOYMENT.
(i) On the Participant Election and Enrollment Form, each
Participant shall elect a method of receipt for distributions from the Plan upon
Retirement, Disability, death or other termination of employment or Board
service (voluntary or involuntary), each an event of Separation from Employment.
Such election shall indicate that the Participant has chosen to receive either:
(a) a lump sum on the January 1 immediately following the earliest triggering
event of the Participant's Separation from Employment, or (b) a minimum of 2,
and a maximum of 15, annual installments beginning on the January 1 immediately
following the earliest triggering event of the Participant's Separation from
Employment, or as soon as administratively practicable thereafter. Each annual
installment shall be equal to the value of the vested portion of the
Participant's Account multiplied by a fraction, the numerator of which is 1 and
the denominator of which is the number of installments remaining to be paid less
any applicable tax withholding.
(ii) If a Participant should die before distribution of the entire
vested portion of the Participant's Account has been made to him, any remaining
amounts, less applicable withholding taxes, shall be distributed to the
Participant's Beneficiary in the same manner in which such amounts otherwise
would have been distributed to the Participant.
(iii) Notwithstanding the foregoing provisions of this Section 5.2
or the provisions of Section 5.1, the remaining vested portion of a
Participant's Account, less applicable withholding taxes, shall be distributed
to the Participant or his Beneficiary, in a lump sum, as soon as
administratively practicable following a Change of Control.
(iv) The value of a Participant's Account, for purposes of
determining the amount to be distributed to the Participant or his Beneficiary,
shall be determined as of the December 31 immediately preceding the
distribution.
5.3. METHOD OF DISTRIBUTION. Distribution of the Participant's Account
shall be made in cash.
5.4. HARDSHIP DISTRIBUTIONS. Upon the written request of a Participant and
in the event the Committee determines that an "unforeseeable emergency" has
occurred with respect to a Participant, the Participant may be allowed to (i)
suspend any deferrals required to be made by the Participant and/or (ii) receive
a partial or full payment from the Plan. The payout shall not exceed the lesser
of (i) the amount the Committee deems to be necessary to meet the emergency or
(ii) the Participant's Account. For this purpose, an "unforeseeable emergency"
shall mean an unanticipated emergency, such as a sudden and unexpected illness
or accident of the Participant or a dependent of the
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Participant or loss of the Participant's property due to casualty, that is
caused by an event beyond the control of the Participant and that would result
in severe financial hardship if the withdrawal were not permitted. The need to
pay a Participant's child's tuition to college and the desire to purchase a home
shall not be considered unforeseeable emergencies.
5.5 WITHDRAWAL ELECTION. A Participant (or, after a Participant's death,
his or her Beneficiary) may elect, at any time, to withdraw all of the vested
portion of the Participant's Account, calculated as if there had occurred a
Separation from Employment as of the day of the election, less a withdrawal
penalty equal to 10% of such amount. This election can be made at any time,
before or after Participant's Separation from Employment, and whether or not the
Participant (or Beneficiary) is in the process of being paid pursuant to an
installment payment schedule. No partial withdrawals shall be allowed. The
Participant (or his or her Beneficiary) shall make this election by giving the
Committee advance written notice of the election in a form determined from time
to time by the Committee, and such payments made hereunder shall be paid within
60 days of such election. Once payment is made under this Section 5.5, the
Participant's participation in the Plan shall terminate and the Participant
shall not be eligible to participate in the Plan in the future.
ARTICLE VI
ADMINISTRATION OF THE PLANS
6.1. ADMINISTRATION BY THE COMMITTEE. The Committee shall be responsible
for the general operation and administration of the Plan and for carrying out
the provisions thereof.
6.2. GENERAL POWERS OF ADMINISTRATION. All provisions set forth in the
Savings Plan with respect to the administrative powers and duties of the
Committee and procedures for filing claims shall also be applicable with respect
to the Plan. The Committee shall be entitled to rely conclusively upon all
tables, valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Committee with respect to the Plan. All expenses of administration relating to
the Plan may be debited against the Participant's Account, in the same manner as
expenses are charged to accounts under the Savings Plan.
ARTICLE VII
AMENDMENT OR TERMINATION
7.1. AMENDMENT OR TERMINATION. The Company intends the Plan to be
permanent but reserves the right, by resolution of the Board or by action of any
committee thereof, to amend or terminate the Plan when, in the sole opinion of
the Board or the committee, such amendment or termination is advisable. Any such
amendment or termination shall be made pursuant to a resolution of the Board, or
by action of a committee thereof, and shall be effective as of the date of such
resolution or action unless specifically provided otherwise.
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7.2. EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination of
the Plan shall directly or indirectly reduce the balance of any Participant's
Account held hereunder as of the effective date of such amendment or
termination. Upon termination of the Plan, distribution of amounts in the
Participant's Account shall be made to the Participant or his Beneficiary in the
manner and at the time described in Article V of the Plan. No additional credits
of contributions shall be made to the Participant's Account for periods after
termination of the Plan, but the Committee shall continue to credit gains and
losses to the Participant's Account, until the balance of such Participant's
Account has been fully distributed to the Participant or his Beneficiary.
ARTICLE VIII
GENERAL PROVISIONS
8.1. PARTICIPANT'S RIGHTS UNSECURED. The Plan shall be unfunded for tax
purposes and for purposes of Title I of ERISA. However, the Company may transfer
assets to cover all or a portion of the value of Participant Accounts in a trust
for the benefit of the Participants which such trust shall be subject to the
rights of creditors of the Company. Although the value of each Participant's
Account will be measured as if such Accounts were invested in the Investment
Funds selected by the Participant pursuant to the Plan, neither the Company nor
any other Employer or the trust shall be required to invest any assets in any
Investment Funds, and if the Company or any other Employer does in fact make any
investments in any Investment Funds, the Participant or Beneficiary shall have
no rights in or claims against any such investments. The right of a Participant
or his designated Beneficiary to receive a distribution hereunder shall be an
unsecured claim against the trust and against the general assets of his Employer
and the Company, and neither the Participant nor a designated beneficiary shall
have any rights in or against any specific assets of the Company or any other
Employer.
8.2. NO GUARANTEE OF BENEFITS. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other Employer or any other person
or entity that the assets of the Company or any other Employer will be
sufficient to pay any benefit hereunder.
8.3. SPENDTHRIFT PROVISION. No interest of any person or entity in, or
right to receive a distribution under, the Plan shall be subject in any manner
to sale, transfer, assignment, pledge, attachment, garnishment, or other
alienation or encumbrance of any kind; nor may such interest or right to receive
a distribution be taken, either voluntarily or involuntarily for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims in bankruptcy proceedings.
8.4. APPLICABLE LAW. The Plan shall be construed and administered under
the laws of the State of Florida.
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8.5. INDIRECT PAYMENT OF BENEFITS. If any Participant or his Beneficiary
is, in the judgment of the Committee, legally, physically or mentally incapable
of personally receiving and receipting for any payment due hereunder, payment
may be made to the guardian or other legal representative of such Participant or
Beneficiary or, if none, to such person or institution who, in the opinion of
the Committee, is then maintaining or has custody of such Participant or
Beneficiary. Such payments shall constitute a full discharge with respect
thereto.
8.6. NOTICE OF ADDRESS. Each person entitled to a benefit under the Plan
must file with the Employer or the Company, in writing, his post office address
and each change of post office address which occurs between the date of his
termination of service with the Employer or the Company and the date he ceases
to be a Participant. Any communication, statement, or notice addressed to such a
person at his latest reported post office address will be binding upon him for
all purposes of the Plan and neither the Committee, the Company, nor the
Employer shall be obliged to search for or ascertain his whereabouts.
8.7. NOTICES. Any notice required or permitted to be given hereunder to a
Participant or Beneficiary will be properly given if delivered or mailed,
postage prepaid, to the Participant or Beneficiary at his last post office
address as shown on the Company's or the Employer's records. Any notice to the
Committee, the Company or the Employer shall be properly given or filed upon
receipt by the Committee, the Company or the Employer, as the case may be, at
such address as may be specified from time to time by the Committee.
8.8. WAIVER OF NOTICE. Any notice required hereunder may be waived by
the person entitled thereto.
8.9. UNCLAIMED PAYMENTS. If a Participant or his Beneficiary fails to
apprise the Committee of changes in the address of the Participant or
Beneficiary, and the Committee is unable to communicate with the Participant or
Beneficiary at the address last recorded by the Committee within five years
after any benefit becomes due and payable from the Plan to the Participant or
Beneficiary, the Committee may mail a notice by registered mail to the last
known address of such person outlining the following action to be taken unless
such person makes written reply to the Committee within 60 days from the mailing
of such notice: The Committee may direct that such benefit and all further
benefits with respect to such person shall be discontinued and all liability for
the payment thereof shall terminate.
8.10. EMPLOYER-EMPLOYEE RELATIONSHIP. The establishment of this Plan shall
not be construed as conferring any legal or other rights upon any Employee or
any person for a continuation of employment, nor shall it interfere with the
rights of an Employer to discharge any Employee or otherwise act with relation
to him. Each Employer may take any action (including discharge) with respect to
any Employee or other person and may treat him without regard to the effect
which such action or treatment might have upon him as a Participant of this
Plan.
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8.11. RECEIPT AND RELEASE. Any final payment or distribution to any
Participant, his Beneficiary or his legal representative in accordance with this
Plan shall be in full satisfaction of all claims against the Committee, the
Company, and the Employer; the Employer, the Company, or the Committee may
require a Participant, his Beneficiary or his legal representative to execute a
receipt and release of all claims under this Plan upon a final payment or
distribution or a receipt to the extent of any partial payment or distribution;
and the form of any such receipt and release shall be determined by the
Employer, the Company or the Committee.
8.12. LIMITATIONS ON LIABILITY. Notwithstanding any of the preceding
provisions of the Plan, neither the Company, the Committee, nor any individual
acting as employee or agent of the Company or the Committee shall be liable to
any Participant, former Participant or other person for any claim, loss,
liability or expense incurred in connection with the Plan.
8.13. MISCELLANEOUS. Words in the masculine gender shall include the
feminine and the singular shall include the plural, and vice versa, unless
qualified by the context. Any headings used herein are included for ease of
reference only, and are not to be construed so as to alter the terms hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be signed
and its corporate seal to be hereunto affixed by its duly authorized officers on
this ____ day of ___________, 1996.
RYDER SYSTEM, INC.
By: __________________________
Stephen N. Karp
Vice President
Compensation and Benefits
ATTEST:
By: ______________________
H. Judith Chozianin
Secretary
13
EXHIBIT 10.11
[LOGO]
June 26, 1997
TO: Larry S. Mulkey
FROM: M. Anthony Burns
RE: Agreement and Release
In accordance with the Older Workers Benefit Protection Act, I am required to
inform you of the following regarding your execution of the attached Agreement
and Release.
1. You should consult with an attorney before signing the Agreement and
Release.
2. You will have twenty-one (21) days from the day you receive the Agreement
and Release to execute it. If you have not executed the Agreement and
Release by the twenty-first day, it will automatically be declared null
and void and revoked.
3. After you have executed the Agreement and Release, you have seven (7)
calendar days to revoke your acceptance of it. If you revoke the Agreement
and Release within the seven (7) calendar days, it is null and void. For
the revocation of the Agreement and Release to be effective, written
notice must be received by Edward R. Henderson no later than the close of
business on the seventh day after you sign the Agreement and Release.
4. If you do not revoke your execution of the Agreement and Release within
the seven (7) calendar days, it will become effective and payments will
commence in accordance with the terms of the Agreement and Release.
Please acknowledge below your receipt of this document, as well as the attached
Agreement and Release, and that you have read and understand this page of
conditions.
Acknowledged:
/s/ LARRY S. MULKEY
- -------------------------
Larry S. Mulkey
7/30/97
- -------------------------
Date
Attachment
<PAGE>
AGREEMENT AND RELEASE
THIS AGREEMENT AND RELEASE, dated as of June 30, 1997, is between RYDER
INTEGRATED LOGISTICS, INC. ("the Company") and LARRY S. MULKEY ("Employee").
WITNESSETH:
WHEREAS, the Company has employed Employee in a managerial capacity; and
WHEREAS, Employee and the Company now desire to plan for the termination
of Employee's employment relationship with the Company;
NOW, THEREFORE, in consideration of the following terms, covenants and
conditions, the Company and Employee agree as follows:
1. (a) TERMINATION OF SEVERANCE AGREEMENTS. The Company and Employee agree
that the Severance Agreement between Employee and Ryder System, Inc. ("RSI"),
dated as of May 1, 1996, and the Change of Control Severance Agreement between
Employee and RSI, dated as of the same date, which provide severance benefits to
Employee in the event of Employee's termination under specified circumstances,
as well as any predecessor agreements (collectively the "Prior Agreements"), are
hereby terminated as of the date of this Agreement and Release. Neither the
Company, RSI nor Employee shall have any further obligations under the Prior
Agreements.
(b) TERM AND SEVERANCE. Employee agrees that the employment of Employee
will be terminated on July 31, 1998 ("Employee's Last Day Worked"). Effective as
of today's date, Employee will resign as an officer and/or director of the
Company, RSI and/or their subsidiaries or affiliates and, to the extent
applicable, from all committees of which Employee is a member. Employee agrees
to sign the attached letter of resignation immediately upon receipt. Until
Employee's Last Day Worked, Employee shall continue to receive his current
salary. Thereafter, the Company shall continue Employee's current salary
payments as severance pay on the fifteenth and last day of each month for a
twenty-three (23) month period beginning on the day following Employee's Last
Day Worked, unless terminated sooner pursuant to Paragraph 26 (the "Period").
Notwithstanding the foregoing, in the event Employee obtains another
position, regardless of whether such position is on a temporary, part-time,
full-time or consulting basis, with the Company, RSI, Ryder TRS, Inc. (formerly
known as RCTR Holdings, Inc.) or Questor Management Company, or any of their
subsidiaries or affiliates, after the Employee's Last Day Worked but prior to
the last day of the Period, Employee understands and agrees that all severance
payments will cease immediately and that all liabilities and obligations
hereunder shall terminate, except as provided in Paragraph 28.
(c) DUTIES. Until Employee's Last Day Worked, Employee agrees to provide
continued expertise and guidance in the business, affairs and management of the
Company and its subsidiaries and affiliates; to provide for transition
assistance to the Company; and to provide any other services or support
requested by the Chairman, President and Chief Executive Officer of RSI, or his
designee.
<PAGE>
2. VACATION ENTITLEMENT. Employee has twenty-eight (28) days of unused and
accrued vacation entitlement and shall be paid in a lump sum for such
entitlement no later than five (5) days following Employee's Last Day Worked.
3. MEDICAL AND DENTAL BENEFITS. Until Employee's Last Day Worked, the Company's
health care program benefits will be provided in accordance with the terms of
the Company's health care program, as it may be amended from time to time.
Following Employee's Last Day Worked, the Company's health care program
benefits will be provided in accordance with the Consolidated Omnibus Budget
Reconciliation Act of 1985 as amended ("COBRA"), and the terms of the Company's
health care program, as it may be amended from time to time.
Following Employee's Last Day Worked and until the first to occur of (i)
the last day of the Period, (ii) the date Employee ceases the required employee
contributions, or (iii) the date Employee becomes eligible for medical and/or
dental benefits as an employee of another employer, Employee shall pay a pre-tax
contribution for such coverage at the then current employee contribution rates
for officers and the Company shall pay the balance of the COBRA premiums.
Thereafter, if Employee is eligible and wishes to continue Employee's COBRA
coverage, Employee shall be solely responsible for payment of the entire COBRA
premiums.
Commencing August 1, 1998, Employee shall be eligible for the Company's
Early Retiree Medical Program in effect at that time and in accordance with the
terms of the program as it may be amended from time to time.
4. LIFE INSURANCE AND SPLIT DOLLAR LIFE INSURANCE. Coverage under the Company's
group life insurance plan and/or supplemental life insurance policy, if
applicable, will continue until the first to occur of (i) the last day of the
Period, (ii) the date Employee becomes eligible for such coverage as an employee
of another employer, or (iii) for supplemental life insurance only, the date
Employee effectively cancels the premium deduction taken from Employee's pay or
severance pay. Such coverage will be in accordance with the terms of the plan
and/or policy as they may be amended from time to time.
Employee will continue to be covered by the Company's group life insurance
plan and any supplemental life insurance, if applicable, during each plan's
conversion privilege period, which is the thirty-one (31) days following the
last day of coverage as defined above. During such period, Employee may convert
the insurance coverage to an individual policy by directly contacting and
arranging the conversion through Standard Insurance Company, or such other
insurance company as is then providing coverage.
With regard to the Company's split-dollar life insurance as of the date of
this Agreement and Release, Employee may retain the split-dollar policy with its
attendant cash value less any repayment of premiums paid by the Company.
5. SALARY CONTINUANCE/SALARY PROTECTION; SUPPLEMENTAL LONG TERM DISABILITY
INSURANCE. Coverage under the Company's Salary Continuance program and/or Salary
Protection insurance policy, if applicable, will continue until the first to
occur of (i) the last day of the Period, (ii) the date Employee becomes
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<PAGE>
employed by another employer, or (iii) for Salary Protection insurance only, the
date Employee effectively cancels the premium deduction taken from Employee's
severance pay. Employee shall not be eligible to receive both severance payments
and Salary Continuance and/or Salary Protection payments at the same time. Such
coverage will be in accordance with the terms of the program and/or policy as
they may be amended from time to time.
The cost of Employee's Supplemental Long Term Disability insurance will
continue to be paid for by the Company through the last day of the Period,
provided the Employee remains enrolled in the underlying basic long term
disability coverage with the Standard Insurance Company of Oregon or has other
coverage with an equivalent benefit. If Employee obtains other disability
coverage during the Period and/or no longer participates in the Company's basic
long term disability program, Employee must advise the Company of the amount of
coverage Employee has with the new carrier for purposes of adjusting the
coverage provided under the Supplemental Long Term Disability insurance.
6. BUSINESS TRAVEL ACCIDENT INSURANCE. Coverage under the Company's Business
Travel Accident Insurance Plan, as it may be amended from time to time, will
cease as of Employee's Last Day Worked.
7. RETIREMENT BENEFITS. Employee will continue to participate in and to accrue
benefits under the Ryder System, Inc. Retirement Plan, as it may be amended from
time to time, until the first to occur of (i) the last day of the Period, or
(ii) the last day of the thirteenth week of the Period. Employee has met the
vesting requirements of the Retirement Plan and will receive retirement benefits
in accordance with the Retirement Plan provisions.
8. HEALTH OR DEPENDENT DAY CARE REIMBURSEMENT ACCOUNTS. If Employee is a
participant in the Health Care Reimbursement Account, Employee's participation
will end on Employee's Last Day Worked. Thereafter, Employee may continue to
participate in the Health Care Reimbursement Account by electing COBRA coverage.
If Employee is a participant in the Dependent Day Care Reimbursement
Account, Employee may continue to participate until the earlier to occur of (a)
the end of the Period, or (b) the end of the current Plan year.
Participation shall be in accordance with the terms of the programs as
they may be amended from time to time. Claims in connection with the Health or
Dependent Day Care Reimbursement Accounts must be filed in accordance with Plan
provisions. Any questions regarding continued participation in such Accounts
should be directed to the Company's Vice President, Compensation and Benefits
Administration.
9. EMPLOYEE SAVINGS PLAN (INCLUDING PAYSOP SHARES); DEFERRED COMPENSATION Plan.
If applicable, Employee will continue to participate in the Ryder System, Inc.
Employee Savings Plan, as it may be amended from time to time, until the first
to occur of (i) the last day of the Period, or (ii) the last day of the
thirteenth week of the Period. If the value of Employee's account is $3,500 or
less, a lump sum distribution will be made pursuant to plan provisions. If the
value of Employee's account is greater than $3,500, Employee's account will be
maintained in the Ryder System, Inc. Employee Savings Plan unless and until the
Employee requests a distribution from the Plan. However, if Employee has not
requested a distribution by age 70 1/2, then a distribution will be made in
accordance with plan provisions. Employee should direct
3
<PAGE>
any questions regarding the Ryder System, Inc. Employee Savings Plan to the
Company's Vice President, Compensation and Benefits Administration.
If applicable, Employee will continue to participate in the Ryder System,
Inc. Deferred Compensation Plan until the first to occur of (i) the last day of
the Period, or (ii) the last day of the thirteenth week of the Period.
Employee's account will be maintained in the Ryder System, Inc. Deferred
Compensation Plan. The vested portion of Employee's account shall be distributed
on the January 1 following the first to occur of (i) the last day of the Period,
or (ii) the last day of the thirteenth week of the Period, or as soon as
administratively practicable thereafter. Such distribution shall be made in
accordance with Employee's most recent election and enrollment form on file with
the plan.
10. STOCK PLANS. From and after the date of this Agreement and Release,
Employee will not be eligible for any stock option grants under the Ryder
System, Inc. 1980 Stock Incentive Plan or the Ryder System, Inc. 1995 Stock
Incentive Plan (the "1980 and 1995 Plans"), nor will Employee be eligible to
participate in any other stock option, stock purchase or similar plan or program
offered by the Company or any of its subsidiaries or affiliates. Employee must
exercise stock options granted pursuant to any of the Company's stock option
plans and vested on Employee's "Termination Date" within the period following
Employee's "Termination Date" specified by the applicable stock option
agreement. For purposes of the 1980 and 1995 Plans, the phrase "Termination
Date" shall mean the end of the Period with respect to Non-Qualified Stock
Options granted pursuant to such plans, unless, on Employee's Last Day Worked,
Employee shall be eligible for early retirement in which event the retirement
provisions of such plans shall be applicable.
11. INCENTIVE COMPENSATION AND DEFERRED COMPENSATION. Employee shall receive a
combined tenure-related and bonus multiple cash bonus payment in the amount of
four hundred forty thousand dollars ($440,000) no later than five (5) business
days after Employee's Last Day Worked. Employee is not entitled to receive any
cash bonus payment pursuant to any other incentive compensation plan.
Salary or bonus awards that Employee has previously deferred, if any, will
be distributed in accordance with Employee's individual deferred compensation
agreement(s) or pursuant to any deferred compensation plan elections made by
Employee.
12. CAR ALLOWANCE. Employee shall receive a car allowance of eight hundred
dollars ($800) per month while an employee of the Company and a lump sum car
allowance of nineteen thousand two hundred dollars ($19,200) within five (5)
business days following Employee's Last Day Worked.
13. PERQUISITE, FINANCIAL PLANNING/TAX PREPARATION AND EXECUTIVE PHYSICAL
ALLOWANCES, OUTPLACEMENT AND RELOCATION ASSISTANCE. For calendar year 1997, if
not yet paid, and for calendar years 1998, 1999 and 2000, the Company shall
provide Employee with the perquisite allowance, and for calendar years 1998 and
1999 the financial planning/tax preparation and executive physical allowance,
under which Employee would have been entitled to receive reimbursement had he
been an officer and/or director of the Company, pursuant to the plans and
programs of the Company, as they may be amended from time to time.
In lieu of professional outplacement services, the Company shall provide
Employee with a cash payment of fifty-one thousand six hundred forty-four
dollars ($51,644) within five (5) business days following Employee's Last Day
Worked.
4
<PAGE>
The Company shall provide Employee with relocation assistance,
commensurate with Employee's management level, in connection with the sale of
Employee's residence in Miami, Florida pursuant to the Company's relocation
program, as it may be amended from time to time.
14. UNEMPLOYMENT COMPENSATION AND OTHER BENEFITS. After Employee's Last Day
Worked, should Employee apply for Unemployment Benefits and should the Company
be requested to complete any documents in connection therewith, the Company
shall complete such necessary documents and will not contest Employee's receipt
of such benefits.
Attached to this Agreement and Release as Exhibit A is a Benefit Schedule
outlining the employee benefits for which Employee is currently eligible as an
employee of the Company and for which Employee will be eligible during the
Period and, in certain instances, thereafter. Employee acknowledges and agrees
that these benefits are derived from certain employee benefit plans and programs
of the Company, are governed by their terms and are subject to change. Any
benefits not specifically stated in this Agreement and Release, including
Exhibit A, to continue beyond Employee's Last Day Worked shall cease on
Employee's Last Day Worked, unless provided otherwise in the relevant plan or
policy or by law.
15. COVENANT OF CONFIDENTIALITY. All documents, records, techniques, business
secrets and other information, including this Agreement and Release, and any and
all incidents leading to or resulting from this Agreement and Release, which
have or will come into Employee's possession from time to time during Employee's
affiliation with the Company, RSI and/or any of their subsidiaries or affiliates
shall be deemed to be confidential and proprietary to the Company, RSI and/or
any of their subsidiaries or affiliates and shall be their sole and exclusive
property. Employee agrees that Employee will keep confidential and not divulge
to any other party any of the Company's, RSI's or their subsidiaries' or
affiliates' confidential information and business secrets, including, but not
limited to, such matters as costs, profits, markets, sales, products, product
lines, key personnel, pricing policies, operational methods, customers, customer
requirements, suppliers, plans for future developments, and other business
affairs and methods and other information not readily available to the public,
except as required by law. Additionally, Employee agrees that upon Employee's
termination of employment, Employee shall promptly return to the Company any and
all confidential and proprietary information that is in Employee's possession.
16. COVENANT OF NON-SOLICITATION. Until June 30, 2000, Employee, either on
Employee's own account or for any person, firm or company, shall not solicit,
interfere with or induce, or attempt to induce, any employee of the Company, RSI
or any of their subsidiaries or affiliates to leave their employment or to
breach their employment agreement, if any.
17. COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee agrees not to make
any remarks disparaging the conduct or character of the Company, RSI or any of
their subsidiaries or affiliates, their agents, employees, officers, directors,
successors or assigns ("Ryder"). In addition, Employee agrees to cooperate with
Ryder in any litigation or administrative proceedings (e.g., EEOC charges)
involving any matters with which Employee was involved during Employee's
employment with the Company. The
5
<PAGE>
Company shall reimburse Employee for travel expenses approved by the Company
incurred in providing such assistance.
18. COVENANT AGAINST COMPETITION. Until June 30, 2000, Employee shall not engage
or become a partner, director, officer, principal, employee, consultant,
investor, creditor or stockholder, directly or indirectly, in any business,
proprietorship, association, firm or corporation not owned or controlled by the
Company, RSI and/or any of their subsidiaries or affiliates which is engaged or
proposes to engage or hereafter engages in a business competitive directly with
the business conducted by the Company, RSI and/or any of their subsidiaries or
affiliates in any geographic area where such business of the Company, RSI and/or
any of their subsidiaries or affiliates is conducted, without the prior written
consent of RSI's Chairman, President and Chief Executive Officer. This
prohibition includes, but it is not limited to, the purchaser of RSI's consumer
truck rental and move management business. However, Employee is not prohibited
from owning one percent (1%) or less of the outstanding capital stock of any
corporation whose stock is listed on a national securities exchange.
19. SPECIFIC REMEDY. Employee acknowledges and agrees that if Employee commits a
material breach of the Covenant of Confidentiality (Paragraph 15), Covenant of
Non-solicitation (Paragraph 16), Covenant of Non-Disparagement and Cooperation
(Paragraph 17) or Covenant Against Competition (Paragraph 18), the Company shall
have the right to have the obligations of Employee specifically enforced by any
court having appropriate jurisdiction on the grounds that any such breach will
cause irreparable injury to the Company, and that money damages will not provide
an adequate remedy to the Company. Employee further acknowledges and agrees that
the obligations contained in Paragraphs 15, 16, 17 and 18 of this Agreement and
Release are fair, do not unreasonably restrict Employee's future employment and
business opportunities, and are commensurate with the compensation arrangements
set out in this Agreement and Release.
20. APPLICABLE LAW. This Agreement and Release shall be governed by and
construed according to the laws of the state of Florida.
21. WITHHOLDING AND TAXATION. All payments under this Agreement and Release
shall be less applicable withholding taxes and other proper deductions consented
to in writing by Employee or required by applicable law or regulation.
Additionally, the payments and benefits under this Agreement and Release may
result in imputed income to Employee and may be included in either Employee's
W-2 earnings statements or 1099 statements.
22. ASSIGNMENT. This Agreement and Release is personal to Employee and Employee
does not have the right to assign this Agreement and Release or any interest
herein. This Agreement and Release shall be binding on and inure to the benefit
of the successors of the Company.
23. SEVERABILITY. In the event that one or more terms or provisions of this
Agreement and Release are found to be invalid or unenforceable for any reason or
to any extent, each remaining term and provision shall continue to be valid and
effective and shall be enforceable to the fullest extent permitted by law.
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<PAGE>
24. UNSECURED, UNFUNDED OBLIGATIONS. The payments and benefits provided to
Employee pursuant to this Agreement and Release may be unsecured, unfunded
obligations of the Company.
25. DEATH OF EMPLOYEE. If Employee dies at any time during the term of this
Agreement and Release, any remaining payments owed by the Company to Employee
will be paid to the estate of Employee.
26. BREACH OF THE AGREEMENT. Except as provided in Paragraph 28, the Period,
this Agreement and Release, and all liabilities and obligations hereunder shall
terminate on the date Employee commits a material breach of the provisions of
this Agreement and Release or the Company determines that Employee committed an
act(s) of misconduct, including, but not limited to, theft, sexual harassment,
or fraud, during his employment with the Company.
27. ARBITRATION. Should any dispute arise relating to the meaning or application
of this Agreement and Release, such dispute shall be settled in Miami, Florida,
in accordance with the commercial arbitration rules of the American Arbitration
Association and such settlement shall be final and binding.
28. SURVIVAL. Paragraphs 16 and 18 of this Agreement and Release shall survive
termination for a material breach by Employee of the provisions of this
Agreement and Release for the full period set forth in Paragraphs 16 and 18.
Paragraphs 15, 17, 19 and 30 shall survive termination of this Agreement and
Release for any reason.
29. COUNTERPARTS. This Agreement and Release may be executed in any number of
counterparts and/or duplicate originals, any of which shall be deemed to be an
original, and all of which together shall be deemed one and the same document.
30. RELEASE. FOR AND IN CONSIDERATION OF THE SEVERANCE BENEFITS PROVIDED TO
EMPLOYEE BY THE COMPANY, EMPLOYEE, ON BEHALF OF EMPLOYEE, EMPLOYEE'S HEIRS,
EXECUTORS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES AND FOREVER DISCHARGES RYDER
FROM ANY AND ALL CLAIMS, DEMANDS, OBLIGATIONS, LOSSES, CAUSES OF ACTION, COSTS,
EXPENSES, ATTORNEYS' FEES AND ALL LIABILITIES WHATSOEVER, WHETHER KNOWN OR
UNKNOWN, SUSPECTED OR UNSUSPECTED, FIXED OR CONTINGENT, WHICH EMPLOYEE HAS OR
MAY HAVE AGAINST RYDER AS A RESULT OF EMPLOYEE'S EMPLOYMENT BY AND SUBSEQUENT
TERMINATION AS AN EMPLOYEE OF THE COMPANY, UP TO THE DATE OF THE EXECUTION OF
THIS AGREEMENT AND RELEASE. THIS INCLUDES BUT IS NOT LIMITED TO CLAIMS AT LAW OR
EQUITY OR SOUNDING IN CONTRACT (EXPRESS OR IMPLIED) OR TORT ARISING UNDER
FEDERAL, STATE, OR LOCAL LAWS PROHIBITING AGE, SEX, RACE, DISABILITY, VETERAN OR
ANY OTHER FORMS OF DISCRIMINATION. THIS FURTHER INCLUDES ANY AND ALL CLAIMS
ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE AMERICANS WITH
DISABILITIES ACT OF 1990, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, OR THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA), AS AMENDED, OR CLAIMS GROWING
OUT OF ANY LEGAL RESTRICTIONS ON THE COMPANY'S RIGHT TO TERMINATE ITS EMPLOYEES.
EMPLOYEE COVENANTS AND AGREES THAT EMPLOYEE WILL NOT SUE
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<PAGE>
OR FILE ANY LAWSUIT OR ACTION AGAINST RYDER IN THE FUTURE WITH RESPECT TO ANY
CLAIM OR CAUSE OF ACTION RELEASED AS PART OF THIS AGREEMENT AND RELEASE.
EMPLOYEE FURTHER AGREES THAT IF EMPLOYEE VIOLATES THIS COVENANT OR ANY OTHER
PROVISION OF THIS AGREEMENT AND RELEASE, EMPLOYEE SHALL INDEMNIFY RYDER FOR ALL
COSTS AND ATTORNEYS FEES INCURRED BY RYDER IN ENFORCING THIS AGREEMENT AND
RELEASE.
31. NON-ADMISSION. This Agreement and Release shall not in any way be construed
as an admission by the Company of any unlawful or wrongful acts whatsoever
against Employee or any other person, and the Company specifically disclaims any
liability to or wrongful acts against Employee or any other person, on the part
of Ryder.
32. ENTIRE AGREEMENT. Employee understands that this document constitutes the
entire agreement concerning severance pay and related benefits between Employee
and the Company, that this document may not be modified except by a written
document signed by Employee and the Company, and that no other promises have
been made concerning the subject matter covered herein. Employee understands and
agrees that the Company has no obligations to Employee beyond the terms of this
Agreement and Release and Employee acknowledges that Employee has not relied
upon any representations or statements, written or oral, not set forth in this
document.
33. REVOCATION PERIOD. EMPLOYEE UNDERSTANDS AND ACKNOWLEDGES THAT EMPLOYEE HAS
SEVEN (7) CALENDAR DAYS FOLLOWING EMPLOYEE'S EXECUTION OF THIS AGREEMENT AND
RELEASE TO REVOKE EMPLOYEE'S ACCEPTANCE OF THIS AGREEMENT AND RELEASE (THE
"REVOCATION PERIOD") AND THAT THIS AGREEMENT AND RELEASE SHALL NOT BECOME
EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED. REVOCATION OF
THIS AGREEMENT AND RELEASE MUST BE MADE BY DELIVERING A WRITTEN NOTICE OF
REVOCATION TO EDWARD R. HENDERSON, ASSISTANT GENERAL COUNSEL. FOR THIS
REVOCATION TO BE EFFECTIVE, WRITTEN NOTICE MUST BE RECEIVED BY EDWARD R.
HENDERSON NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER EMPLOYEE
SIGNS THIS AGREEMENT AND RELEASE. IN ADDITION, EMPLOYEE UNDERSTANDS AND
ACKNOWLEDGES THAT NO MONIES WILL BE PAID UNDER THE TERMS OF THIS AGREEMENT AND
RELEASE UNTIL THE END OF THE REVOCATION PERIOD.
EMPLOYEE CERTIFIES THAT EMPLOYEE HAS FULLY READ, HAS RECEIVED AN EXPLANATION OF,
HAS NEGOTIATED AND COMPLETELY UNDERSTANDS THE PROVISIONS OF THIS AGREEMENT AND
RELEASE, THAT EMPLOYEE HAS BEEN ADVISED BY THE COMPANY TO CONSULT WITH AN
ATTORNEY BEFORE SIGNING THIS AGREEMENT AND RELEASE, THAT EMPLOYEE HAS BEEN GIVEN
AT LEAST TWENTY-ONE (21) CALENDAR DAYS TO REVIEW AND CONSIDER THE PROVISIONS OF
THIS AGREEMENT AND RELEASE, AND THAT EMPLOYEE IS SIGNING FREELY AND VOLUNTARILY,
WITHOUT DURESS, COERCION OR UNDUE INFLUENCE.
8
<PAGE>
PLEASE READ CAREFULLY AS THIS DOCUMENT INCLUDES
A GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS
Witness: LARRY S. MULKEY
("Employee")
/s/ SALLY NEWCOMB 7/30/97 /s/ LARRY S. MULKEY 7/30/97
- ------------------------------- --------------------------------
Signature Date Signature Date
/s/ BETTY MULKEY 7/30/97
- ------------------------------- --------------------------------
Signature Date Social Security Number
Attest: RYDER INTEGRATED LOGISTICS, INC.
(the "Company")
/s/ EDWARD R. HENDERSON 8/21/97 By /s/ M.A. BURNS 8/21/97
- ------------------------------- --------------------------------
Signature Date Signature Date
Title: Assistant Secretary Title: Director
------------------------ --------------------------
9
<PAGE>
JUNE 30, 1997
TO THE BOARD OF DIRECTORS
OF RYDER SYSTEM, INC.
Gentlemen:
Effective immediately, I hereby resign as an officer and/or director of Ryder
System, Inc. and/or its subsidiaries and affiliates and, to the extent
applicable, from all committees of which I am a member.
Sincerely,
/s/ LARRY S. MULKEY
---------------------
Larry S. Mulkey
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
LARRY S. MULKEY
BENEFIT SCHEDULE
- ----------------------------- ---------------------------------- --------------------------------- --------------------------------
PROGRAM 1ST YEAR 2ND YEAR 3RD YEAR
- ----------------------------- ---------------------------------- --------------------------------- --------------------------------
<S> <C> <C> <C>
Medical Plan Coverage for you and Coverage for you and Coverage for you and
Enrolled eligible dependents eligible dependents will be eligible enrolled
Will be the same as when provided either (i) in dependents will be
Enrolled as officer. accordance with the terms provided either (i) in
of the Company's Early accordance with the terms
Contributions will be the Retiree Medical Program of the Company's Early
Same as for officers. or (ii) in accordance with Retiree Medical Program
COBRA. or (ii) in accordance with
COBRA.
(7/1/97 to 7/31/98) (8/1/98 to 7/31/99) (8/1/99 to 6/30/2000)
- ----------------------------- ---------------------------------- --------------------------------- --------------------------------
Dental Plan Coverage for you and Coverage for you and Coverage for you and
Enrolled eligible dependents eligible enrolled eligible enrolled
Will be the same as when dependents will be dependents will be
Enrolled as officer. provided in accordance provided in accordance
with COBRA. with COBRA.
Contributions will be the
Same as for officers.
(7/1/97 to 7/31/98) (8/1/98 to 7/31/99) (8/1/99 to 6/30/2000)
- ----------------------------- ---------------------------------- --------------------------------- --------------------------------
Life Insurance BASIC - Coverage continues Same as 1st year. Same as 1st year.
Until the last day of the
Month in which the
Severance period ends.
(6/30/2000)
Additional - Does not
Participate.
- ----------------------------- ---------------------------------- --------------------------------- --------------------------------
- ----------------------------- ----------------------------------
PROGRAM AFTER SEVERANCE
- ----------------------------- ----------------------------------
Medical Plan Eligible for retiree medical
coverage at rates for those
/more than/ 30 years of service.
(On and after 7/1/2000)
- ----------------------------- ----------------------------------
Dental Plan No dental coverage
available.
(On and after 7/1/2000)
- ----------------------------- ----------------------------------
Life Insurance Can convert to an
individual whole life policy
within 31 days of
termination of coverage
upon end of severance
period (6/30/2000)
- ----------------------------- ----------------------------------
<PAGE>
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
PROGRAM 1ST YEAR 2ND YEAR 3RD YEAR
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
<S> <C> <C> <C>
Split-Dollar Life Insurance Coverage continues until Same as 1st. year Same as 1st. year
the last Day of month in
which severance period
ends (6/30/2000)
Coverage is 3 times base salary.
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
Retiree Life Insurance N/A N/A N/A
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
Dependent Life Insurance Does not participate. N/A N/A
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
Accidental Death and Does not participate. N/A N/A
Dismemberment
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
Dependent Accidental Does not participate. N/A N/A
Death and Dismemberment
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
Short-Term Disability Coverage continues until Same as 1st. year. Same as 1st. year.
(Salary Continuance) the last Day of month in N/A
which severance period ends
(6/30/2000).
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
- ------------------------------ ----------------------------------
PROGRAM AFTER SEVERANCE
- ------------------------------ ----------------------------------
Split-Dollar Life Insurance Company will provide a
"paid-up" policy. You may
maintain the policy for
death benefit coverage or
surrender for its cash value.
Coverage is 1.5 times base
salary.
- ------------------------------ ----------------------------------
Retiree Life Insurance Coverage equal to 25% of highest
year's earnings to maximum of
$50,000.
- ------------------------------ ----------------------------------
Dependent Life Insurance N/A
- ------------------------------ ----------------------------------
Accidental Death and N/A
Dismemberment
- ------------------------------ ----------------------------------
Dependent Accidental N/A
Death and Dismemberment
- ------------------------------ ----------------------------------
Short-Term Disability N/A
(Salary Continuance)
- ------------------------------ ----------------------------------
<PAGE>
- ------------------------------ -------------------------------- ---------------------------------- --------------------------------
PROGRAM 1ST YEAR 2ND YEAR 3RD YEAR
- ------------------------------ -------------------------------- ---------------------------------- --------------------------------
<S> <C> <C> <C>
Long-Term Disability Coverage continues until Same as 1st year. Same as 1st year.
(Standard Insurance) last day of month in which
Severance period ends.
(6/30/2000).
- ------------------------------ -------------------------------- ---------------------------------- --------------------------------
Supplemental Long-Term Coverage continues until Same as 1st year. Same as 1st year.
Disability last day of month in which
(UNUM) Severance period ends.
(6/30/2000).
- ------------------------------ -------------------------------- ---------------------------------- --------------------------------
Health Care Participation continues To participate, you must To participate, you must
Reimbursement Until end of ca lendar year make an election during make an election during
(12/31/97). annual enrollment (1/1/98 annual enrollment (1/1/99
to 12/31/98; after to 12/31/99; 1/1/2000 to
7/31/98), participation is 6/30/2000).
based upon COBRA
continuation of coverage. Coverage ends on last day
of month in which
severance period ends.
(6/30/2000)
- ------------------------------ -------------------------------- ---------------------------------- --------------------------------
Retirement Plan Participation continues Participation continues No additional accruals.
(7/1/97) to 7/31/98) until the end of the 1st 13
weeks (8/1/98 to 10/31/98).
- ------------------------------ -------------------------------- ---------------------------------- --------------------------------
- ------------------------------ --------------------------------
PROGRAM AFTER SEVERANCE
- ------------------------------ --------------------------------
Long-Term Disability Can convert to an
(Standard Insurance) individual policy
within 31 days of
termination of coverage
upon end of severance
period (6/30/2000)
- ----------------------------- --------------------------------
Supplemental Long-Term Can convert to an
Disability individual whole life policy
(UNUM) within 31 days of
termination of coverage
upon end of severance
period (6/30/2000)
- ----------------------------- --------------------------------
Health Care N/A
Reimbursement
- ----------------------------- --------------------------------
Retirement Plan Eligible to commence
payment
- ----------------------------- --------------------------------
<PAGE>
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
PROGRAM 1ST. YEAR 2ND. YEAR 3RD. YEAR
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
<S> <C> <C> <C>
Employee Savings Plan Participation, including match, Participation, including Eligible for distribution.
(401(K)) continues (7/1/97 to 7/31/98). match, continues until the
end of the 1st. 13 weeks;
then, eligible for
distribution (8/1/98 to
10/31/98).
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
Savings Restoration Balances were transferred into N/A N/A
the Deferred Compensation Plan. Distribution 1/1/99
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
Deferred Compensation Plan Continue to defer based on 1997 Deferral in accordance with Deferral in accordance with
election (7/1/97 to 7/31/98) signed agreement. signed agreement.
until the end of the 1st 13
weeks (8/1/98 to 10/31/98).
- ------------------------------ ---------------------------------- ------------------------------- ---------------------------------
</TABLE>
- ------------------------------ ----------------------------------
PROGRAM AFTER SEVERANCE
- ------------------------------ ----------------------------------
Employee Savings Plan Eligible for distribution.
(401 (K))
- ------------------------------ ----------------------------------
Savings Restoration N/A
- ------------------------------ ----------------------------------
Deferred Compensation Plan Distribution per attached
worksheet.
- ------------------------------ ----------------------------------
EXHIBIT 10.13
FINANCIAL REVIEW
[GRAPHIC OF STACKED PAPERS AND A PEN]
OVERVIEW
In 1997, the company recorded its best results from continuing operations since
1987. During 1997, the company also completed the sale of its automotive carrier
business. The sale, which follows the 1996 sale of the consumer truck rental
business, reinforces the company's strategy to emphasize contractual businesses
which are less cyclical and capital intensive. In the accompanying consolidated
statements of operations and cash flows, the automotive carrier business has
been reported as a discontinued operation (see the "Divestitures" note to the
consolidated financial statements for a further discussion).
Earnings from continuing operations in 1997 increased to $160 million, or
$2.05 per diluted common share, compared with a loss in 1996 of $19 million, or
$0.24 per diluted common share, and earnings in 1995 of $128 million, or $1.61
per diluted common share. Excluding restructuring and other charges and the
consumer truck rental business, earnings from continuing operations were $103
million, or $1.27 per diluted common share, in 1996 and $124 million, or $1.56
per diluted common share, in 1995. Earnings from
16
<PAGE>
continuing operations increased 55% in 1997 (and decreased 17% in 1996) after
adjusting for the effects of restructuring and other charges and the sale of the
consumer truck rental business. All of the company's business units contributed
to the improved results in 1997. The decrease in 1996 earnings was caused by
weak performance in the cyclical commercial rental business and decreases in the
International Division primarily due to lower operating margins in the U.K. and
start-up losses in other countries.
Revenue in 1997 totaled $4.9 billion, a decrease of $42 million, or 1%,
from 1996. Excluding the consumer truck rental business, revenue increased 9%,
or $398 million, in 1997 compared with 1996. Integrated logistics, public
transportation services and International led the 1997 growth with
year-over-year increases of at least 20%. These increases were somewhat offset
by decreases in full service truck leasing and commercial truck rental. In 1996,
revenue increased $363 million, or 8%, compared with 1995. Excluding consumer
truck rental, revenue increased 12% in 1996 compared with 1995, led by full
service truck leasing and integrated logistics.
Total operating expense as a percentage of revenue (excluding restructuring
and other charges and the consumer truck rental business) was about the same in
1997 compared with 1996 and slightly higher in 1996 compared with 1995. In 1997,
the operating expense ratio compared with 1996 reflected proportionately higher
logistics costs (including subcontracted freight costs on contracts in which the
company purchases transportation), offset by an overall decrease in employee
benefit and vehicle liability expenses. The growth in the less capital intensive
logistics business, particularly in contracts involving subcontracted freight,
will lead to a higher operating expense ratio for the company than historical
levels, although depreciation expense and interest expense as a percentage of
revenue should decline accordingly. The 1996 increase was primarily due to
higher equipment rental costs, as a result of an increase in the number of
vehicles leased by the company.
Depreciation expense (before gains on vehicle sales) decreased 1% in 1997
compared with 1996 (excluding consumer truck rental) as the average size of the
full service vehicle fleet remained constant while the average size of the
commercial truck rental fleet decreased 8%. Excluding the consumer truck rental
business, depreciation expense (before gains on vehicle sales) increased 10% in
1996 compared with 1995. This increase was attributable to a larger average
vehicle fleet size in response to strong sales of new full service lease and
logistics contracts. Excluding the consumer truck rental business, gains on
vehicle sales decreased in 1997 and 1996 by $2 million and $11 million,
respectively. The decreases were due to a reduced number of vehicles sold in
both 1997 and 1996 and lower average gains per vehicle sold in 1996.
Interest expense decreased 8% in 1997 compared with 1996 and increased 7%
in 1996 compared with 1995. The changes in interest expense were driven
primarily by the average outstanding debt levels during the periods. The lower
average debt levels during 1997 reflected the impact of reduced capital spending
which began in 1996 and the company's use of proceeds from the sale of its
consumer truck rental business to pay down debt. At December 31, 1997,
approximately
[GRAPH]
1997 REVENUE
Full service truck leasing 37%
Integrated logistics 28%
Public transportation services 11%
Commercial truck rental 9%
International Division 9%
Other 6% 17
<PAGE>
27% of the company's financing obligations had variable interest rates.
Miscellaneous (income) expense included costs associated with selling, with
limited recourse, trade receivables. Such costs were $6 million in 1997, $13
million in 1996 and $15 million in 1995. The decrease in 1997 reflects a lower
sales volume during the period. Miscellaneous (income) expense in 1996 also
included a $25 million gain on the sale of the consumer truck rental business.
The company's effective tax rate for continuing operations was 39.3% in
1997, 222.1% in 1996 and 41.3% in 1995. The lower 1997 tax rate relative to
prior years resulted primarily from the impact of a reduced amount of
non-deductible expenses on higher pretax earnings as well as a reduction in the
corporate income tax rate in the U.K. The higher 1996 effective tax rate is
primarily due to the tax effects of non-deductible foreign charges associated
with the restructuring and other charges. Additionally, lower income before
taxes in 1996 increased the rate impact of normal, recurring non-deductible
expenses.
During 1996, the company recorded restructuring and other charges of $228
million, attributable to continuing operations, related to plans to improve
organizational effectiveness, improve margins and contain costs. The charges
included $105 million for employee separation and other costs related to the
elimination of 2,300 positions, $94 million for costs and asset write-downs
related to the closure of approximately 200 operating and administrative
facilities, and other write-downs related to certain information systems and
other assets, and $29 million of other costs including relocation and
professional fees. The 1996 charges included $72 million of restructuring
charges related to employee separations and facility closures, of which payments
totalling $45 million and $15 million were made in 1997 and 1996, respectively.
As of December 31, 1997, the company had completed nearly all employee
reductions and facility closures contemplated by the restructuring plan.
Management believes that the remaining restructuring liabilities of $12 million
are adequate to complete its plans and that the liabilities will be
substantially paid by the end of 1998. See the "Restructuring and Other Charges"
note to the consolidated financial statements for a further discussion.
During 1997, after consideration of the potential impact to operations,
including customer and supplier relationships, an enterprise-wide plan was
initiated to modify computer information systems to be Year 2000 compliant
(properly read dates, perform calculations and continue to perform business
critical functions when the calendar year changes to the year 2000) or to
replace noncompliant systems. The impact on after tax earnings for incremental
Year 2000 costs is estimated to range from $21 million to $26 million, including
$3 million for 1997. The majority of these costs will be expensed in 1998, and
the plan is expected to be completed by mid-1999. Future costs are difficult to
estimate and actual results could differ significantly from the company's
current estimates due to changes in software remediation or replacement plans,
unanticipated technological difficulties, project vendor delays or overruns, and
the cost and availability of resources.
ACCOUNTING CHANGES
Effective December 31, 1997, the company adopted Statement of Financial
Accounting Standards (FAS) No. 128, "Earnings per Share." This Statement
requires the presentation
18
<PAGE>
of basic and diluted earnings per share (EPS). Basic EPS is computed by dividing
net earnings (loss) by the weighted average number of common shares outstanding.
Diluted EPS reflects the dilutive effect of potential common shares from
securities such as stock options. All prior years EPS data has been restated to
conform with the provisions of the new Statement.
Effective January 1, 1995, the company adopted FAS No. 116, "Accounting for
Contributions Received and Contributions Made." As a result, a pretax charge of
$12 million ($8 million after tax, or $0.10 per diluted 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.
UNDERSTANDING RYDER'S BUSINESS UNIT PERFORMANCE
Dollars in thousands 1997 1996 1995
- -------------------- ---- ---- ----
BUSINESS UNITS
Revenue
Full service lease and
programmed maintenance $2,087,284 2,129,341 1,959,683
Commercial rental 502,378 515,773 568,558
Integrated logistics 1,370,320 1,104,797 866,654
International Division 457,869 358,869 301,770
Public transportation 525,757 439,750 400,197
Consumer truck rental -- 440,113 546,818
Other and eliminations (49,703) (52,520) (70,705)
---------- --------- --------
Total 4,893,905 4,936,123 4,572,975
Operating expense 3,837,368 4,034,186 3,502,546
Depreciation expense 642,368 741,052 716,098
Gains on sale of revenue
earning equipment (52,294) (65,758) (89,851)
Interest expense 192,016 211,675 196,833
Miscellaneous (Income)
expense, net (7,998) (19,894) 3,346
---------- --------- --------
Earnings from business units
before income taxes 282,445 34,862 244,003
CORPORATE ADMINISTRATIVE
EXPENSES AND OTHER (18,493) (40,892) (26,018)
---------- --------- --------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES $ 263,952 (6,030) 217,985
========== ========= ========
Fleet size (owned and leased,
including international):
Full service lease 113,565 112,518 106,710
Commercial rental 36,631 37,609 39,319
Consumer rental -- -- 35,682
Buses operated or managed 14,552 13,098 12,855
Transportation services
locations 957 1,083 1,136
The company's primary business units consist of integrated logistics,
transportation services (which primarily provides full service truck leasing and
commercial truck rental in the United States and Canada), the International
Division (which provides full service truck leasing
19
<PAGE>
[PHOTO]
and integrated logistics in Europe, South America and Mexico) and public
transportation services. The company sold substantially all the assets of its
consumer truck rental business in October 1996 and sold the automotive carrier
business in September 1997. As a result, the company's operations are less
cyclical and asset intensive and more focused on contractual businesses.
Business unit pretax earnings increased from $35 million in 1996 ($200
million excluding restructuring and other charges and consumer truck rental) to
$282 million in 1997. The improvement resulted from higher overall operating
margin and improved overhead expenses as a percentage of revenue. The
improvement in overhead expenses was primarily due to the 1996 restructuring
actions and a focus on cost containment throughout the company.
INTEGRATED LOGISTICS REVENUE
[GRAPH]
INTEGRATED LOGISTICS
Integrated logistics, the company's fastest growing business, provides
system-wide management of the entire logistics channel from raw material supply
management to finished goods distribution. Ryder's integrated logistics
solutions range from just-in-time pickup and delivery that smoothes material
flow into assembly and manufacturing plants, to flow-through distribution center
management where products from multiple locations are brought into a central
facility, consolidated by delivery destination and shipped, all in the same day.
Additionally, Ryder offers dedicated contract carriage, mode selection and
carrier management to bring finished products to market.
Ryder serves more than 400 large and small customers across a variety of
industries including automotive, health care, food and beverage, high tech,
manufacturing, paper, retail, telecommunications, utilities and the public
sector. Ryder's supply chain management helps such customers as John Deere,
Nortel and Hewlett-Packard gain the competitive advantages that result from
speeding products to market, reducing inventory management, freeing working
capital, improving customer satisfaction and expanding globally.
Integrated logistics continued its strong growth with 1997 revenue reaching
$1.4 billion, an increase of $266 million compared with the prior year, or 24%.
Expansion of business with existing customers and start-up of business from
sales in 1996 were largely responsible for the increase in integrated logistics
revenue. The largest component of growth in 1997 came from contracts for which
Ryder manages the transportation of freight and subcontracts the delivery of
products to third parties. Operating revenue (which excludes subcontracted
freight) was 10% higher in 1997 compared with 1996. Sales of new logistics
contracts in 1997 were lower than in 1996. As a result, the revenue growth rate
for this product line in the first half of 1998 will be lower than growth rates
experienced in recent quarters. However, the company believes that improved
sales force capabilities, industry segmentation, and the ability to leverage
rapidly emerging logistics technologies and alliances to enhance service
offerings will result in renewed growth in sales of new logistics contracts in
1998, followed by higher revenue growth rates.
Integrated logistics operating margin and margin as a percentage of revenue
were higher in 1997 compared with 1996 due primarily to the growth in revenue
combined with operating efficiencies, improved pricing in new and existing
contracts and lower vehicle liability expense.
20
<PAGE>
Higher operating margin combined with lower overhead expenses resulted in a
significant earnings improvement in integrated logistics in 1997.
Revenue increased 27% in 1996 compared with 1995, due primarily to
continued emphasis on growing business related to larger, more complex logistics
contracts. Operating margin was higher in 1996 due to revenue growth and margin
as a percentage of revenue was relatively unchanged.
FULL SERVICE TRUCK LEASING
Full service truck leasing continues to be Ryder's largest product line,
supplying nearly 13,000 full service truck leasing customers with 103,000
vehicles in the U.S. and Canada. Full service truck leasing is designed for
customers who wish to manage their own transportation systems without investing
the capital and human resources necessary to own and maintain a fleet. The full
service truck leasing product line provides nearly all of the vehicles operated
by Ryder to serve logistics customers, as well as nearly all the maintenance
services for public transportation services vehicles.
Under a customized full service lease, Ryder offers customers vehicle
specification and acquisition support; preventive maintenance; licensing and
permitting; emergency road service; fuel and fuel tax reporting; substitute
vehicles; safety programs; customized vehicle painting and washing; flexible
return conditions; and vehicle reliability and protection programs. Some of
Ryder's full service lease customers are Ace Hardware Corporation, Benjamin
Moore & Co., Dana Corporation, Domino's Pizza, Inc., PepsiCo, Inc. and Quaker
State Corporation.
To serve customers and prospects with more tailored solutions to meet their
financial, maintenance and vehicle management needs, Ryder offers the Ryder
Citicorp Lease. The Ryder Citicorp Lease combines Ryder's equipment management
expertise with Citicorp's financing flexibility to provide customized solutions
in four service areas: vehicle specification and acquisition, financing,
programmed maintenance, and vehicle management services.
Ryder's maintenance expertise is also available to companies who choose to
own their vehicles. Ryder Programmed Maintenance offers companies all the
components of a full service lease except the actual vehicles. Many programmed
maintenance customers eventually ask Ryder to take on an expanded role in their
transportation operations.
Revenue from full service truck leasing decreased 2% in 1997 compared with
1996 primarily due to decreased fuel revenue as a result of both lower fuel
volume and prices. Excluding fuel, revenue was about the same in 1997, as new
lease sales were offset by lost business including selected non-renewal of lower
margin business. Operating margin and margin as a percentage of revenue were
slightly lower in 1997 compared with 1996 as the benefit of improved pricing on
new lease sales in 1997 and 1996 was offset by higher vehicle maintenance costs.
The pricing of new leases on average significantly improved in 1997 compared
with 1996 and the average pricing over the prior four years. The higher return
thresholds required on new leases and selected non-renewal of existing lower
margin business was in accordance with economic value added (EVA) criteria
adopted by the company in 1997 which help drive more selective pursuit of new
and retained business.
Revenue from full service truck leasing increased 9% in 1996 compared with
1995 as a result of the
[PHOTO OF TRACTOR TRAILER]
FULL SERVICE TRUCK LEASING REVENUE
[GRAPH]
21
<PAGE>
[PHOTO OF TRUCK]
impact from strong new lease sales in 1995. Operating margin was about the same
in 1996 compared with 1995 and margin as a percentage of revenue was lower. The
decline in margin percentage was primarily due to the impact of lower pricing on
new lease sales in 1995 compared with prices on older and expiring leases.
[GRAPH]
COMMERCIAL TRUCK RENTAL REVENUE
TRUCK RENTAL
Helping companies meet their short-term transportation needs safely, efficiently
and cost-effectively is one of Ryder's strengths. With more than 34,000 trucks,
tractors and trailers available for rent in the U.S. and Canada, Ryder offers
vehicles for short-term rental and supplements the needs of full service lease
customers when they require additional vehicles to meet peak demand, to replace
vehicles being serviced or to serve as temporary vehicles while awaiting
delivery of new full service lease vehicles.
Commercial truck rental revenue decreased 3% in 1997 compared with 1996,
primarily due to planned fleet reductions; however, revenue per unit and
utilization were higher in 1997. Strengthening demand for rental resulted in
revenue growth in the second half of 1997 compared with the second half of 1996.
The average commercial truck rental fleet size was 8% lower in 1997 compared
with 1996 which was consistent with management's plan to downsize the rental
fleet in late 1996 and early 1997. Management believes that with the current
fleet level and increased demand in late 1997, this product line is well
positioned for continued good performance in 1998. However, the rental product
line continues to be sensitive to the overall condition of the U.S. economy and
1998 rental results will depend to a great extent on the strength of the
economy. Revenue from commercial truck rental decreased 9% in 1996 compared with
1995, primarily reflecting a smaller fleet and less demand from full service
lease customers requiring additional vehicles during peak periods and while
awaiting delivery of new full service lease vehicles.
Commercial truck rental operating margin and margin as a percentage of
revenue increased significantly in 1997 compared with 1996 as a result of higher
vehicle utilization. Operating margin and margin as a percentage of revenue
decreased in 1996 compared with 1995 due to a decline in revenue and lower
utilization.
INTERNATIONAL DIVISION
During 1997, Ryder continued to consolidate its presence within three of the
world's major trading blocs EU, NAFTA, and MERCOSUR pursuing the objective of
becoming a leading provider of global integrated logistic solutions.
A prime example of Ryder's international strategy is the range of services
provided to Whirlpool, a Ryder customer in various regions of the world. In the
U.K., Ryder provides Whirlpool with about 40,000 home deliveries per year and
has been providing such value-added services as installation, retrieval and
disposal of appliances since 1994. Outside Europe, Ryder manages inbound
logistics for all of Whirlpool's North American operations. In addition,
22
<PAGE>
[PHOTO DISTRIBUTION SERVICES]
Ryder coordinates crossborder shipments into the U.S. from Vitromatic,
Whirlpool's joint venture in Mexico and serves Whirlpool Reynosa, the Whirlpool
maquiladora operation, which provides wiring harnesses for Whirlpool's U.S.
manufacturing facilities. For Whirlpool's joint venture in Brazil, Ryder has
undertaken a project to analyze the deliveries of finished products from the
manufacturing facility and distribution centers to customers. Ryder also has a
consulting contract that examines the logistics design for parts delivery and
finished goods distribution for a new plant the joint venture is building in
northern Brazil.
In the Latin American region of MERCOSUR, Ryder has a majority share of the
automotive logistics market. Ryder is the Lead Logistics Provider for General
Motors Corporation's (GM) four assembly plants in Argentina and Brazil. In
addition, Ryder has a consulting agreement with GM Colombia and GM Venezuela to
design a more effective finished vehicle distribution process.
[GRAPH]
INTERNATIONAL DIVISION REVENUE
The International Division experienced revenue growth of 28% in 1997 and
19% in 1996. The 1997 increase was primarily due to new logistics and
maintenance contracts in the U.K. and expanding operations in Argentina and
Mexico. The 1996 increase was a result of full service truck leasing and
logistics acquisitions made in the U.K. in late 1994 as well as revenue
generated from expansion into Argentina and Mexico. International Division
operating margin was higher in 1997 compared with 1996 as a result of revenue
growth, while margin as a percentage of revenue was lower due to a change in
product mix in the U.K. Operating margin and margin as a percentage of revenue
were lower in 1996 compared with 1995 due to increased competition in most of
the major product lines in the U.K. and continued start-up expenses in South
America and Europe. The company anticipates continued expansion in South America
and Mexico in 1998 although economic conditions in these areas could impact the
timing and level of expansion. At this time there are no significant legal
restrictions regarding the repatriation of cash flows to the U.S. from the
foreign countries where the company is currently operating.
PUBLIC TRANSPORTATION
Ryder further extends its transportation, asset management and maintenance
expertise to the public sector through its public transportation services unit,
which includes student transportation, public transit and public fleet
management and maintenance services.
The second largest provider of student transportation services in the U.S.,
Ryder Student Transportation Services transports more than 600,000 students
daily in more than 460 school systems in 25 states. School systems using Ryder's
services include those in Seattle, Washington; Minneapolis/St. Paul, Minnesota;
St. Louis, Missouri; and Baltimore, Maryland.
Ryder/ATE provides public transit contracting and management services to
more than 90 public transit
[GRAPH]
PUBLIC TRANSPORTATION SERVICES REVENUE
23
<PAGE>
[PHOTO OF USERS OF PUBLIC TRANSPORTATION SERVICES]
organizations in such cities as Los Angeles, California; Dallas, Texas; New
York, New York; and Charlotte, North Carolina. Those systems range from shuttles
with fixed routes and express service to paratransit systems.
Ryder/MLS is the nations leading provider of fleet management and
maintenance services for public fleets and for utility companies. More than
30,000 vehicles and pieces of equipment owned by cities, counties,
municipalities, colleges and utilities are managed or maintained by Ryder/MLS.
Public transportation services revenue increased 20% in 1997 compared with
1996 and 10% in 1996 compared with 1995. The growth in 1997 was a result of
expansion of existing contracts and contributions from new contracts, primarily
at Ryder/ATE, as well as the impact of a first quarter 1997 acquisition in
student transportation and public transportation. The increase in 1996 was
primarily due to the addition of new public transit contracts at Ryder/ATE.
Operating margin and margin as a percentage of revenue from public
transportation services were both higher in 1997 compared with 1996, primarily
as a result of the growth in revenue, lower vehicle liability expense and lower
driver compensation costs as a percentage of revenue. Both operating margin and
margin as a percentage of revenue from these businesses decreased in 1996
compared with 1995 as a result of higher operating expenses caused by adverse
weather conditions, increased driver compensation and start-up costs associated
with new transit contracts at Ryder/ATE.
CORPORATE ADMINISTRATIVE EXPENSES AND OTHER
Corporate administrative expenses and other totaled $18 million in 1997 compared
with $22 million in 1996 (excluding restructuring and other charges) and $26
million in 1995. Lower 1997 costs were due primarily to headcount reductions
resulting from the 1996 restructuring plan and reduced spending levels. The
reduction of expenses in 1996 compared with 1995 was primarily due to interest
income earned on short-term investments made with proceeds received from the
sale of the consumer truck rental business.
DISCONTINUED OPERATIONS
On September 30, 1997, the company completed the sale of its automotive carrier
business for $111 million in cash and realized a $3 million after tax gain
($0.04 per diluted common share). The transaction was made at a premium over the
net book value of the business sold and also generated gains from the settlement
and curtailment of certain employee benefit and postretirement plans, offset by
provisions for severance and direct transaction and other costs. The disposal of
the automotive carrier business has been accounted
24
<PAGE>
for as a discontinued operation and accordingly, its operating results and cash
flows are segregated and reported as discontinued operations in the accompanying
consolidated financial statements.
Earnings (loss) from discontinued operations before disposition gain
totaled $12 million in 1997, $(12) million in 1996 and $27 million in 1995. The
loss from discontinued operations in 1996 included the after tax impact of
restructuring and other charges of $14 million. The increase in 1997 earnings
(excluding restructuring and other charges) was primarily due to an increase in
vehicles shipped through the sale date over the comparable 1996 period and
reduced overhead expenses as a result of the 1996 restructuring actions. The
decrease in 1996 earnings as compared with 1995 was due to restructuring and
other charges, higher wages resulting from a new contract with the Teamsters,
higher fuel costs, higher vehicle liability and cargo damage expenses, increased
maintenance costs and the impact of two strikes against the operation's largest
customer.
FINANCIAL RESOURCES AND LIQUIDITY
CASH FLOW
The company's cash requirements in 1997 continued to be funded principally
through operations and the sale of revenue earning equipment. Cash flow from
continuing operating activities was $616 million in 1997, compared with $533
million in 1996 and $759 million in 1995. The increase in 1997 compared with
1996 was primarily attributable to higher earnings before non-cash charges, such
as depreciation and deferred income taxes, partially offset by higher working
capital needs. The decrease in cash flow from continuing operating activities in
1996 compared with 1995 resulted primarily from lower earnings before non-cash
charges such as depreciation and deferred income taxes. A more detailed analysis
of the individual items contributing to the cash flow changes is included in the
Consolidated Statements of Cash Flows.
During 1997, the company concluded a six-million-share buyback, announced
in October 1996, and initiated an additional six-million-share buyback program.
During 1997 and 1996, common stock repurchased under these programs totaled $241
million (7.0 million shares) and $123 million (4.2 million shares),
respectively. The company utilized proceeds from the sales of the automotive
carrier business and the consumer truck rental business, cash from operating
activities and commercial paper borrowings to fund these programs.
During 1997, the company completed a number of acquisitions in full service
truck leasing and public transportation, each of which has been accounted for as
a purchase. Total consideration for these acquisitions was $84 million. The
company will continue to evaluate selective acquisitions in full service truck
leasing, public transportation and integrated logistics in 1998.
Capital expenditures related to continuing operations were $1.0 billion in
1997, compared with $1.3 billion and $2.1 billion in 1996 and 1995,
respectively. The decrease was consistent with management's plan to restrict
capital spending by increasing return thresholds in accepting new business and
focusing on those products and services with the greatest returns in accordance
with EVA criteria
[GRAPH]
CAPITAL EXPENDITURES - CONTINUING OPERATIONS
25
<PAGE>
adopted in 1997. Capital expenditures for full service truck leasing decreased
$91 million in 1997 to $694 million primarily due to lower new sales levels.
Capital expenditures for commercial truck rental were $103 million in 1997, an
increase of $79 million compared with 1996, due to planned fleet replacement to
reduce the average age of the commercial rental fleet. Public transportation
services capital expenditures of $46 million were comparable with 1996.
International Division capital expenditures decreased $53 million in 1997 due
primarily to planned spending reductions on the lease fleet in the U.K. and
Germany. Capital expenditures on operating property and equipment decreased $79
million in 1997 due primarily to reduced spending on new service locations and
the company's Shared Services Center which was created in 1996. The decrease in
capital expenditures in 1996 compared with 1995 was due primarily to decreased
expenditures in full service truck leasing as a result of lower new sales levels
and in commercial and consumer truck rental due to planned fleet reductions. In
1998, management projects that capital expenditures will exceed 1997 levels by
15-20%, primarily as a result of anticipated growth and fleet replacement in
full service truck leasing. The company expects to fund its 1998 capital
expenditures with both internally generated funds and additional financing.
Cash flow from operating activities (excluding sales of receivables) plus
asset sales (excluding sale of business) as a percentage of capital expenditures
was 92% in 1997, compared with 72% in 1996 and 52% in 1995. The increase in 1997
as compared with 1996 was due primarily to decreased capital expenditures and
improved cash flows from operations. The 1996 increase reflects significantly
lower capital expenditures, partially offset by lower cash flow from operations.
FINANCING
Ryder often depends on external capital to support growth in its asset-based
product lines. The company has a variety of financing alternatives available to
fund its capital needs. These alternatives include long- and medium-term public
and private debt, as well as variable-rate financing available through bank
credit facilities and commercial paper. The company also periodically enters
into sale and leaseback agreements for revenue earning equipment, the majority
of which are accounted for as operating leases. Ratings from Moody's Investors
Service of A3 for unsecured notes and P2 for commercial paper are unchanged from
1996. Duff and Phelps also continues to maintain its D1 rating for commercial
paper and A rating for unsecured notes. On January 21, 1997, the company was
notified by Standard & Poor's Ratings Group that its A- corporate credit rating
and senior unsecured debt rating were placed on credit watch. The Standard &
Poor's Ratings Group affirmed the company's A2 rating on commercial paper. On
June 9, 1997, Standard & Poor's Ratings Group lowered its corporate credit
rating and senior unsecured debt rating on the company to BBB+ and removed the
company from credit watch.
Debt increased from $2.4 billion at the end of 1996 to $2.6 billion at the
end of 1997. This increase was due to financing requirements associated with
stock repurchases, acquisitions and capital expenditures. The company made $134
million of scheduled unsecured note payments in 1997. U.S. commercial paper
outstanding at December 31, 1997, was $340 million,
26
<PAGE>
compared with $16 million at the end of 1996. The company's foreign debt
decreased $59 million in 1997 due primarily to scheduled payments on U.K. and
Canadian rate obligations and foreign currency changes.
During 1997, the company entered into a $720 million global revolving
credit facility, which expires in 2002, and replaced existing credit facilities
in the U.S., U.K. and Canada. The credit facility is primarily to be used to
finance working capital and provide support for the issuance of commercial
paper. At the company's option, the interest rate on borrowings under the credit
facility is based on LIBOR, prime, federal funds or local equivalent rates. The
credit facility has an annual facility fee of 0.07% based on the company's
current credit rating. At December 31, 1997, foreign borrowings of $53 million
were outstanding under the credit facility. At the end of 1997, the company's
committed lines of credit totaled $726 million (including the $720 million
global credit facility), of which $330 million was available. In addition, the
company had $268 million of debt securities available for issuance under a shelf
registration statement filed in 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. No such agreements were entered into during 1997. Proceeds
from sale-leaseback transactions were $150 million in 1996.
From time to time, the company enters into various interest rate swap and
cap agreements in managing interest rate exposure in its existing debt
portfolio. See the "Financial Instruments" note to the consolidated financial
statements for a further discussion of the company's interest rate management
program.
The ratio of debt to equity at December 31, 1997 was 242%, compared with
220% at December 31, 1996. The ratio of debt to tangible equity at December 31,
1997 was 318% compared with 289% at December 31, 1996.
ENVIRONMENTAL MATTERS
The operations of the company involve storing and dispensing petroleum products,
primarily diesel fuel, regulated under environmental protection laws. These laws
require the company to eliminate or mitigate the effect of such substances on
the environment. In response to these requirements, the company has upgraded
operating facilities and implemented various programs to detect and minimize
contamination.
Capital expenditures related to these programs totaled approximately $7 million
in 1997 and $9 million in 1996. Environmental capital expenditures are primarily
related to a government mandated tank replacement program required to be
completed by the end of 1998. These capital expenditures are not expected to
increase materially in relation to the company's level of total capital
expenditures. The company incurred $5 million of environmental expenses in 1997,
compared with $7 million in 1996 and $12 million in 1995, which included normal
recurring expenses, such as
[PHOTO OF MAINTENANCE FACILITY]
27
<PAGE>
licensing, testing and waste disposal fees. Based on current circumstances and
the present standards imposed by governmental regulations, environmental
expenses are not expected to increase materially from 1997 levels in the near
term.
The ultimate cost of the company's environmental liabilities cannot
presently be projected with certainty due to the presence of several unknown
factors, primarily the level of contamination, the effectiveness of selected
remediation methods, the stage of management's investigation at individual sites
and the recoverability of such costs from third parties. Based upon information
presently available, management believes that the ultimate disposition of these
matters, although potentially material to the results of operations in any one
year, will not have a material adverse effect on the company's financial
condition or liquidity. See the "Environmental Matters" note to the consolidated
financial statements for a further discussion.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued FAS No.
130, "Reporting Comprehensive Income," which establishes standards for reporting
and display of comprehensive income and its components. In June 1997, the FASB
also issued FAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." This Statement establishes standards for reporting
information about a company's operating segments and related disclosures about
its products, services, geographic areas of operations and major customers. Both
Statements will be adopted by the company in 1998. The adoption of these
Statements will not impact the company's results of operations, cash flows or
financial position.
OUTLOOK
In 1998, the company will focus on several key areas to sustain growth,
maximize shareholder value and improve EVA. The company will emphasize growing
revenue in full service truck leasing, building on strategic alliances and
enhanced services to increase the base of logistics business, and maintaining
steady growth in public transportation services. The company will also continue
to contain costs and capital spending.
This financial review contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on the current plans and expectations of Ryder System, Inc.
and involve risks and uncertainties that could cause actual future events and
results of operations to be materially different from those in the
forward-looking statements. Important factors that could cause such differences
include, among others, greater than expected expenses associated with the
company's personnel needs or operating activities, the competitive pricing
environment applicable to the company's operations or changes in government
regulations.
28
<PAGE>
REPORT OF MANAGEMENT
TO THE SHAREHOLDERS OF RYDER SYSTEM, INC.:
The financial infomation in this annual report has been prepared by the
management of Ryder System. Management is responsible for the fair presentation
of the financial statements of the company in accordance with generally accepted
accounting principals and for the objectivity of key underlying assumptions and
estimates.
Ryder System maintains a dynamic system of internal controls to provide
reasonable assurance that assets are safeguarded and transactions are properly
authorized, recorded and reflected in the financial statements. This system is
continually reviewed, evaluated and revised to reflect changes in the company
and in the businesses in which we operate. One of the key elements of Ryder
System's internal financial controls has been the company's success in
recruiting, selecting, training and developing professional financial managers
who implement and oversee the financial control system.
The board of directors, acting through its audit committee, is responsible
for determining that management fulfills its responsibilities in the preparation
of financial statements and the financial control of operations. The audit
committee is composed soley of outside directors. The committee recommends to
the board of directors the appointment of the independent public accountants and
meets regularily with management, internal auditors and independent accountants.
Our commitment to social responsibility is a key management principle.
Management is responsible for conducting our businesses in an ethical, moral
manner assuring that our business practices encompass the highest, most
uncompromising standards of personal and business conduct. These standards,
which address conflicts of interest, compliance with laws and acceptable
business practices and proper employee conduct are included in our Code of
Conduct. The importance of these standards is stressed throughout the company
and all of our employees are expected to comply with them.
/s/ M. A. BURNS
- ---------------
M. Anthony Burns
Chairman, President and
Chief Executive Officer
/s/ EDWIN A. HUSTON
- -------------------
Edwin A. Huston
Senior Executive Vice President -
Finance and Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RYDER SYSTEM, INC.:
We have audited the accompanying consolidated balance sheets of Ryder System,
Inc. and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations and cash flows for each of the years in
the three-year period ended December 31, 1997. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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
resonable 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ryder
System, Inc. and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally accepted accounting
principals.
As discussed in the notes to the consolidated financial statements, the
Company changed its method of accounting for charitable contributions in 1995.
/s/ KPMG PEAT MARWICK LLP
- -------------------------
KPMG Peat Marwick LLP
Miami, Florida
February 4, 1998
29
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
RYDER SYSTEM, INC. AND SUBSIDIARIES
YEARS ENDED DECEMBER 31
-----------------------------------------
In thousands, except per share amounts 1997 1996 1995
- -------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Revenue $ 4,893,905 4,936,123 4,572,975
----------- ----------- -----------
Operating expense 3,857,980 4,081,215 3,530,910
Depreciation expense, net of gains 592,279 676,273 627,534
Interest expense 189,361 206,636 193,559
Miscellaneous (income) expense, net (9,667) (21,971) 2,987
----------- ----------- -----------
4,629,953 4,942,153 4,354,990
----------- ----------- -----------
Earnings (loss) from continuing
operations before income taxes 263,952 (6,030) 217,985
Provision for income taxes 103,714 13,393 89,962
----------- ----------- -----------
Earnings (loss) from continuing operations 160,238 (19,423) 128,023
Earnings (loss) from discontinued operations 15,447 (11,864) 27,402
----------- ----------- -----------
Earnings (loss) before extraordinary loss and
cumulative effect of change in accounting 175,685 (31,287) 155,425
Extraordinary loss on early extinguishment of debt -- (10,031) --
Cumulative effect of change in accounting -- -- (7,759)
----------- ----------- -----------
Net earnings (loss) $ 175,685 (41,318) 147,666
=========== =========== ===========
Basic Earnings (Loss) per Common Share:
Continuing operations $ 2.08 (0.24) 1.62
Discontinued operations 0.20 (0.15) 0.35
Extraordinary loss on early extinguishment of debt -- (0.12) --
Cumulative effect of change in accounting -- -- (0.10)
----------- ----------- -----------
$ 2.28 (0.51) 1.87
=========== =========== ===========
Diluted Earnings (Loss) per Common Share:
Continuing operations $ 2.05 (0.24) 1.61
Discontinued operations 0.20 (0.15) 0.35
Extraordinary loss on early extinguishment of debt -- (0.12) --
Cumulative effect of change in accounting -- -- (0.10)
----------- ----------- -----------
$ 2.25 (0.51) 1.86
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE>
CONSOLIDATED BALANCE SHEETS
RYDER SYSTEM, INC. AND SUBSIDIARIES
DECEMBER 31
--------------------------
Dollars in thousands, except per share amounts 1997 1996
- ---------------------------------------------- ----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 78,370 191,384
Receivables 625,955 561,927
Inventories 66,006 61,345
Tires in service 163,771 168,367
Deferred income taxes 22,309 82,571
Prepaid expenses and other current assets 135,574 82,172
----------- -----------
Total current assets 1,091,985 1,147,766
Revenue earning equipment 3,145,461 3,286,088
Operating property and equipment 581,705 615,111
Direct financing leases and other assets 414,932 314,574
Intangible assets and deferred charges 274,977 281,850
----------- -----------
$ 5,509,060 5,645,389
=========== ===========
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt $ 301,361 199,958
Accounts payable 305,337 321,468
Accrued expenses 482,811 633,529
----------- -----------
Total current liabilities 1,089,509 1,154,955
Long-term debt 2,267,554 2,237,010
Other non-current liabilities 365,264 461,275
Deferred income taxes 726,025 686,143
----------- -----------
Total liabilities 4,448,352 4,539,383
----------- -----------
Shareholders' equity:
Common stock of $0.50 par value per share
Authorized, 400,000,000; outstanding,
1997-73,692,226; 1996-77,961,154 328,117 496,292
Retained earnings 743,713 613,887
Translation adjustment (11,122) (4,173)
----------- -----------
Total shareholders' equity 1,060,708 1,106,006
----------- -----------
$ 5,509,060 5,645,389
=========== ===========
See accompanying notes to consolidated financial statements.
31
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
RYDER SYSTEM, INC. AND SUBSIDIARIES
YEARS ENDED DECEMBER 31
-----------------------------------------
In thousands
- ------------ 1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Continuing operations
Cash flows from operating activities:
Earnings (loss) from continuing operations $ 160,238 (19,423) 128,023
Depreciation expense, net of gains 592,279 676,273 627,534
Amortization expense and other non-cash charges, net 9,191 31,563 12,783
Gain on sale of consumer truck rental business -- (25,000) --
Deferred income tax expense (benefit) 124,516 (8,810) 90,945
Proceeds from sales of receivables -- -- 30,000
Changes in operating assets and liabilities:
Receivables (76,895) (192,275) (80,843)
Inventories (7,947) (8,064) 147
Prepaid expenses and other current assets (47,480) 30,397 (28,712)
Other assets (13,818) (230) (7,707)
Accounts payable 22,305 (50,078) (37,169)
Accrued expenses and other non-current liabilities (146,598) 98,330 23,621
----------- ----------- -----------
615,791 532,683 758,622
----------- ----------- -----------
Cash flows from financing activities:
Debt proceeds 371,502 138,992 1,117,739
Debt repaid, including capital lease obligations (251,465) (349,245) (415,857)
Dividends on common stock (45,859) (48,315) (47,372)
Common stock issued 61,973 63,710 11,251
Common stock repurchased (241,335) (122,870) --
----------- ----------- -----------
(105,184) (317,728) 665,761
----------- ----------- -----------
Cash flows from investing activities:
Purchases of property and revenue earning equipment (1,039,118) (1,257,307) (2,087,452)
Sales of property and revenue earning equipment 344,513 373,300 356,393
Sale and leaseback of revenue earning equipment -- 150,000 300,000
Acquisitions, net of cash acquired (84,195) -- --
Proceeds from business sold 111,306 574,167 --
Other, net 38,639 31,625 41,307
----------- ----------- -----------
(628,855) (128,215) (1,389,752)
----------- ----------- -----------
NET CASH FLOWS FROM CONTINUING OPERATIONS (118,248) 86,740 34,631
NET CASH FLOWS FROM DISCONTINUED OPERATIONS 5,234 11,787 (17,652)
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (113,014) 98,527 16,979
Cash and Cash Equivalents at January 1 191,384 92,857 75,878
----------- ----------- -----------
Cash and Cash Equivalents at December 31 $ 78,370 191,384 92,857
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RYDER SYSTEM, INC. AND SUBSIDIARIES
December 31, 1997, 1996 and 1995
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION. The consolidated financial statements include the
accounts of Ryder System, Inc. and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
ORGANIZATION. Ryder System, Inc. is a multinational logistics and transportation
company operating in nine countries. The company's principal business units
consist of integrated logistics, transportation services (which primarily
provides full service truck leasing and commercial truck rental in the United
States and Canada), public transportation services and the International
Division (which provides full service truck leasing and integrated logistics in
Europe, South America and Mexico). As discussed in the Divestitures footnote,
the company completed the sales of its automotive carrier business in 1997 and
consumer truck rental business in 1996. As a result of the decision to sell its
automotive carrier business, the company now operates in a single industry
segment.
REVENUE RECOGNITION. Operating lease and other transportation services revenue
is recognized as vehicles are used and services are provided over the terms of
the related agreements. Direct financing lease revenue is recognized by the
interest method over the terms of the lease agreements. Revenue from integrated
logistics contracts is recognized as services are provided, generally at billing
rates specified in underlying contracts.
CASH EQUIVALENTS. All investments in highly liquid debt instruments with
maturities of three months or less at the date of purchase are classified as
cash equivalents.
INVENTORIES. Inventories, which consist primarily of fuel and vehicle parts, are
valued using the lower of cost (specific identification or average cost) or
market.
REVENUE EARNING EQUIPMENT, OPERATING PROPERTY AND EQUIPMENT AND DEPRECIATION.
Revenue earning equipment, principally vehicles, and operating property and
equipment are stated at cost. Vehicle repairs and maintenance that extend the
life or increase the value of the vehicle are capitalized whereas ordinary
maintenance and repairs are expensed as incurred. Provision for depreciation is
computed using the straight-line method on substantially all depreciable assets.
Annual straight-line depreciation rates range from 8% to 33% for revenue earning
equipment, 2.5% to 10% for buildings and improvements and 10% to 25% for
machinery and equipment.
Gains on operating property and equipment sales are reflected in
miscellaneous (income) expense. Gains on sales of revenue earning equipment, net
of selling and equipment preparation costs, are reported as reductions of
depreciation expense and totaled $52 million, $66 million and $90 million in
1997, 1996 and 1995, respectively.
TIRES IN SERVICE. The company allocates a portion of the acquisition costs of
revenue earning equipment to tires in service and amortizes such tire costs to
expense over the lives of the vehicles and equipment. The cost of replacement
tires and tire repairs are expensed as incurred.
INTANGIBLE ASSETS. Intangible assets consist principally of goodwill totaling
$238 million in 1997 and $248 million in 1996. Goodwill is amortized on a
straight-line basis over appropriate periods generally ranging from 10 to 40
years. Accumulated amortization was approximately $84 million and $85 million at
December 31, 1997 and 1996, respectively.
IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets, including intangible assets,
used in the company's operations are reviewed for impairment when circumstances
indicate that the carrying amount of assets may not be recoverable. The primary
indicators of recoverability are the associated current and forecasted
undiscounted operating cash flows.
SELF-INSURANCE RESERVES. The company retains a portion of the risk under vehicle
liability, worker's compensation and other insurance programs. Reserves have
been recorded which reflect the undiscounted estimated liabilities including
claims incurred but not reported. Such liabilities are necessarily based on
estimates and, while management believes that the amounts are adequate, there
can be no assurance that changes to management's estimates may not occur due to
limitations inherent in the estimation process. Changes in the estimates of
these reserves are charged or credited to income in the period determined.
Amounts estimated to be paid within one year have been classified as accrued
expenses with the remainder included in other non-current liabilities.
INCOME TAXES. Deferred taxes are provided using the asset and liability method
for temporary differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
DERIVATIVE FINANCIAL INSTRUMENTS. From time to time, the company enters into
interest rate swap and cap agreements to manage its fixed and variable interest
rate exposure and to better match the repricing of its debt instruments to that
of its portfolio of assets; it has no derivative financial instruments held for
trading purposes and none of the instruments are leveraged. The company assigns
each interest rate swap and cap agreement to a debt or operating lease
obligation. Amounts to be paid or received under swap and cap agreements are
recognized over the terms of the agreements as adjustments to interest expense
or rent expense.
FOREIGN CURRENCY TRANSLATION. The company's foreign operations generally use the
local currency as their functional currency. Assets and liabilities of these
operations are translated at the
33
<PAGE>
exchange rates in effect on the balance sheet date. Income statement items are
translated at the average exchange rates for the year. The impact of currency
fluctuation is included in shareholders' equity as a translation adjustment. For
subsidiaries whose economic environment is highly inflationary, the U.S. dollar
is the functional currency and gains and losses that result from translation are
included in earnings.
STOCK-BASED COMPENSATION. Stock-based compensation is recognized using the
intrinsic value method. For disclosure purposes, pro forma net earnings (loss)
and earnings (loss) per share are provided as if the fair value method had been
applied.
ACCOUNTING CHANGES. Effective December 31, 1997, the company adopted Statement
of Financial Accounting Standards (FAS) No. 128, "Earnings per Share." This
Statement requires the presentation of basic and diluted earnings per share
(EPS). Basic EPS is computed by dividing net earnings (loss) by the weighted
average number of common shares outstanding. Diluted EPS reflects the dilutive
effect of potential common shares from securities such as stock options. All
prior years EPS data has been restated to conform with the provisions of the new
Statement.
Effective January 1, 1997, the company adopted FAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
which establishes accounting standards for, among other things, the sales of
receivables with recourse. The company also adopted the American Institute of
Certified Public Accountants' Statement of Position 96-1, "Environmental
Remediation Liabilities," effective January 1, 1997. The guidance provided by
these Statements was consistent with the company's current method of accounting
and, therefore, adoption of these Statements did not impact the company's
results of operations, cash flows or financial position.
Effective January 1, 1995, the company adopted FAS No. 116, "Accounting for
Contributions Received and Contributions Made," which requires that a promise to
make a contribution 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 million
($8 million after tax, or $0.10 per diluted 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.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
RECLASSIFICATIONS. Certain prior year amounts have been reclassified to conform
with current year presentation.
RECENT ACCOUNTING PRONOUNCEMENTS. In June 1997, the Financial Accounting
Standards Board (FASB) issued FAS No. 130, "Reporting Comprehensive Income,"
which establishes standards for reporting and display of comprehensive income
and its components. In June 1997, the FASB also issued FAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." This Statement
establishes standards for reporting information about a company's operating
segments and related disclosures about its products, services, geographic areas
of operations and major customers. Both Statements will be adopted by the
company in 1998. The adoption of these Statements will not impact the company's
results of operations, cash flows or financial position.
ACQUISITIONS
During 1997, the company completed a number of acquisitions in full service
truck leasing and public transportation, each of which has been accounted for as
a purchase. The consolidated financial statements reflect the results of
operations of the acquired businesses from the acquisition dates. Pro forma
results of operations have not been presented because the effects of these
acquisitions were not significant. The fair value of assets acquired and
liabilities assumed in connection with these acquisitions was as follows (in
thousands):
Working capital $ (2,170)
Goodwill 42,755
Other net assets 57,809
Non-current liabilities (14,199)
--------
Net assets acquired $ 84,195
========
DIVESTITURES
On September 30, 1997, the company completed the sale of its automotive carrier
business for $111 million in cash and realized a $3 million after tax gain
($0.04 per diluted common share). The transaction was made at a premium over the
net book value of the business sold and also generated gains from the settlement
and curtailment of certain employee benefit and postretirement plans, offset by
provisions for severance and direct transaction and other costs. The disposal of
the automotive carrier business has been accounted for as a discontinued
operation and accordingly, its operating results and cash flows are segregated
and reported as discontinued operations in the accompanying consolidated
financial statements.
34
<PAGE>
Summarized results of the automotive carrier business were as follows:
PERIOD ENDED YEARS ENDED
SEPTEMBER 30 DECEMBER 31
------------ ----------------------
In thousands 1997 1996 1995
--------- --------- ---------
Revenue $ 462,853 583,292 594,446
========= ========= =========
Earnings (loss) before income taxes $ 18,228 (11,592) 46,401
Provision for income taxes 5,981 272 18,999
--------- --------- ---------
Earnings (loss) from discontinued
operations before net
gain on disposition 12,247 (11,864) 27,402
--------- --------- ---------
Loss on disposition (5,300) -- --
Income tax benefit 8,500 -- --
--------- --------- ---------
Net gain on disposition 3,200 -- --
--------- --------- ---------
Earnings (loss) from
discontinued operations $ 15,447 (11,864) 27,402
========= ========= =========
The loss from discontinued operations in 1996 includes a pretax charge of
$18 million as part of a company-wide restructuring. The pretax charge included
$8 million in employee-related costs, $8 million in estimated facility closure
costs and $2 million in other costs. The after tax impact of these charges was
$14 million or $0.18 per diluted common share.
On October 17, 1996, the company sold substantially all the assets and
certain liabilities of its consumer truck rental business for $574 million in
cash, resulting in a pretax gain of $25 million ($15 million after tax), which
is included in miscellaneous (income) expense. Revenue related to the consumer
truck rental business was $440 million for the period January 1 through October
16, 1996 and $547 million for the year ended December 31, 1995. Pretax earnings
of the consumer truck rental business, on a stand alone basis, were $18 million
for the period January 1 through October 16, 1996 and $8 million for the year
ended December 31, 1995.
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 entered into
service agreements for periods ranging from two to five years, with options for
extensions for certain of the agreements. Under the agreements, the company
provides various services to the buyer including vehicle maintenance, claims
processing, management information systems and other administrative services. In
addition, certain company branch locations act as consumer truck rental dealers
and the company assists 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.
RESTRUCTURING AND OTHER CHARGES
During 1996, the company implemented several restructuring initiatives designed
to reduce costs, improve profitability and align the organizational structure
with the strategic direction of the company. As a result of the initiatives, the
company recorded pretax charges in 1996 of $228 million for continuing
operations ($150 million after tax or $1.84 per diluted common share).
The pretax charges included $105 million in employee-related costs, which
were primarily related to the planned elimination of approximately 2,300
positions. This amount included $46 million for approximately 740 employees who
retired pursuant to voluntary early retirement programs. The planned headcount
reductions were substantially completed during 1997.
The company's restructuring initiatives also included the planned closure
of approximately 200 operating and administrative locations in order to achieve
economies of scale and eliminate redundant processes. In connection with these
initiatives, the company recorded $59 million in estimated closure costs,
including asset write-downs of $46 million relating to both facility closures
and the anticipated sale of small non-strategic businesses. During 1997,
approximately 85% of the planned closures were completed and the company has
sold or disposed of approximately 75% of the closed facilities. Additionally,
the 1996 charges included $35 million of write-downs relating primarily to the
discontinuance of the company car program, certain information systems and other
assets.
The company also incurred $29 million of other costs associated with the
restructuring initiatives including relocation of employees and professional
fees incurred as part of the implementation of the restructuring.
The 1996 charges included $78 million of restructuring charges ($72 million
in continuing operations) relating to employee separations and facility closure
costs of which $50 million was paid in 1997 and $16 million was paid in 1996.
Management believes that the remaining restructuring liabilities at December 31,
1997 of $12 million are adequate to complete its plans and that the liabilities
will be substantially paid by the end of 1998.
SALES OF RECEIVABLES
The company participates in an agreement to sell, with limited recourse, up to
$350 million of trade receivables on a revolving basis through July 2002. The
costs associated with this program were $6 million in 1997, $13 million in 1996
and $15 million in 1995 and were charged to miscellaneous (income) expense. At
December 31, 1997 and 1996, the outstanding balance of receivables sold pursuant
to this agreement was $75 million.
35
<PAGE>
REVENUE EARNING EQUIPMENT
In thousands 1997 1996
- -------------------------- ----------- -----------
Full service lease $ 3,538,297 3,302,496
Commercial rental 1,171,038 1,306,998
----------- -----------
4,709,335 4,609,494
Accumulated depreciation (1,742,949) (1,616,076)
----------- -----------
2,966,386 2,993,418
----------- -----------
Other revenue earning equipment 333,588 672,440
Accumulated depreciation (154,513) (379,770)
----------- -----------
179,075 292,670
----------- -----------
$ 3,145,461 3,286,088
=========== ===========
OPERATING PROPERTY AND EQUIPMENT
In thousands 1997 1996
- -------------------------------- ----------- -----------
Land $ 104,813 113,601
Buildings and improvements 467,652 491,714
Machinery and equipment 385,099 402,516
Other 99,445 120,795
----------- -----------
1,057,009 1,128,626
Accumulated depreciation (475,304) (513,515)
----------- -----------
$ 581,705 615,111
=========== ===========
ACCRUED EXPENSES AND OTHER NON-CURRENT LIABILITIES
In thousands 1997 1996
- -------------------------------------------------- ----------- -----------
Salaries and wages $ 113,042 145,222
Employee benefits 17,188 17,246
Interest 41,274 47,614
Operating taxes 66,544 72,622
Self-insurance reserves 249,137 344,803
Postretirement benefits other than pensions 47,694 60,726
Vehicle rent and related accruals 162,611 181,662
Environmental liabilities 29,971 40,424
Other, including restructuring 120,614 184,485
----------- -----------
848,075 1,094,804
Non-current portion (365,264) (461,275)
----------- -----------
Accrued expenses $ 482,811 633,529
=========== ===========
LEASES
OPERATING LEASES AS LESSOR. One of the company's major product lines is full
service leasing of commercial trucks, tractors and trailers. These lease
agreements provide for a fixed time charge plus a fixed per-mile charge. A
portion of these charges is often adjusted in accordance with changes in the
Consumer Price Index. Contingent rentals included in income during 1997, 1996
and 1995 were $233 million, $248 million and $240 million, respectively.
DIRECT FINANCING LEASES. The company leases additional revenue earning equipment
as direct financing leases. The net investment in direct financing leases
consisted of:
In thousands 1997 1996
- ------------ --------- ---------
Minimum lease payments receivable $ 714,065 588,666
Executory costs and unearned income (375,724) (324,108)
Unguaranteed residuals 59,123 45,438
--------- ---------
Net investment in direct financing leases 397,464 309,996
Current portion included in receivables (52,976) (47,888)
--------- ---------
Non-current portion included in other assets $ 344,488 262,108
========= =========
Contingent rentals included in income during 1997, 1996 and 1995 were $26
million, $24 million and $20 million, respectively.
OPERATING LEASES AS LESSEE. The company leases vehicles, facilities and office
equipment under operating lease agreements. The majority of these agreements are
vehicle leases which specify that rental payments be adjusted every six months
based on changes in interest rates and provide for early termination at
stipulated values. During 1997, 1996 and 1995, rent expense was $228 million,
$240 million and $201 million, respectively. Through September 1997, rental
rates were modified by certain interest rate swap agreements as discussed in the
"Summary of Significant Accounting Policies" footnote.
LEASE PAYMENTS. Future minimum payments for leases in effect at December 31,
1997 were as follows:
AS LESSOR AS LESSEE
-------------------------- ----------
DIRECT
OPERATING FINANCING OPERATING
In thousands LEASES LEASES LEASES
- ------------ ---------- ---------- ----------
1998 $ 834,768 127,608 209,587
1999 716,700 119,721 216,017
2000 563,231 111,049 186,419
2001 391,072 99,579 164,291
2002 227,414 83,053 130,646
Thereafter 157,451 173,055 134,747
---------- ---------- ----------
$2,890,636 714,065 1,041,707
========== ========== ==========
The amounts in the previous table are based upon the assumption that
revenue earning equipment will remain on lease for the length of time specified
by the respective lease agreements. This is not a projection of future lease
revenue; no effect has been given to renewals, new business, cancellations,
contingent rentals or future rate changes.
36
<PAGE>
INCOME TAXES
The components of the provision for income taxes attributable to continuing
operations were as follows:
In thousands 1997 1996 1995
- ------------ --------- ------- -------
Current tax expense (benefit):
Federal $ (21,243) 19,756 332
State (998) 2,767 (100)
Foreign 1,439 (320) (1,215)
--------- ------- -------
(20,802) 22,203 (983)
--------- ------- -------
Deferred tax expense (benefit):
Federal 100,756 (13,847) 63,753
State 15,546 (767) 15,409
Foreign 8,214 5,804 11,783
--------- ------- -------
124,516 (8,810) 90,945
--------- ------- -------
Provision for income taxes $ 103,714 13,393 89,962
========= ======= =======
A reconciliation of the Federal statutory tax rate with the effective
tax rate for continuing operations follows:
% OF PRETAX INCOME
---------------------
1997 1996 1995
---- ---- ----
Statutory rate 35.0 (35.0) 35.0
Impact on deferred taxes
for changes in tax rates (0.6) -- --
State income taxes, net of
Federal income tax benefit 3.6 21.6 4.6
Amortization of goodwill 0.9 41.2 1.1
Restructuring and other charges -- 148.6 --
Miscellaneous items, net 0.4 45.7 0.6
---- ----- ----
Effective rate 39.3 222.1 41.3
==== ===== ====
The higher 1996 effective tax rate is primarily due to the tax effects of
non-deductible foreign charges associated with the restructuring and other
charges. Additionally, lower income before taxes in 1996 increased the rate
impact of normal, recurring non-deductible expenses.
The components of the net deferred income tax liability as of December 31,
1997 and 1996 were as follows:
In thousands 1997 1996
--------- -------
Deferred income tax assets:
Self-insurance reserves $ 88,374 136,411
Alternative minimum taxes 12,771 9,412
Accrued compensation and benefits 36,167 45,038
Restructuring and other charges 5,037 27,645
Miscellaneous other accruals 86,593 104,321
--------- --------
228,942 322,827
Valuation allowance (12,445) (16,605)
--------- --------
216,497 306,222
--------- --------
Deferred income tax liabilities:
Property and equipment
bases differences (837,120) (834,581)
Other items (83,093) (75,213)
--------- --------
(920,213) (909,794)
--------- --------
Net deferred income tax liability $(703,716) (603,572)
========= ========
Deferred taxes have not been provided on temporary differences related to
investments in foreign subsidiaries that are considered permanent in duration.
These temporary differences consist primarily of undistributed foreign earnings
of $84 million at December 31, 1997. A full foreign tax provision has been made
on these undistributed foreign earnings. Determination of the amount of deferred
taxes on these temporary differences is not practicable due to foreign tax
credits and exclusions.
The company had unused alternative minimum tax credits, for tax purposes,
of $13 million at December 31, 1997, available to reduce future income tax
liabilities. The alternative minimum tax credits may be carried forward
indefinitely.
A valuation allowance has been established to reduce deferred income tax
assets, principally foreign tax loss carryforwards to amounts expected to be
realized.
Income taxes paid totaled $18 million in 1997, $1 million in 1996 and $13
million in 1995 and include amounts related to both continuing and discontinued
operations.
DEBT
In thousands 1997 1996
- ------------ ----------- ----------
U.S. commercial paper $ 340,000 16,000
Canadian commercial paper 27,339 47,649
Unsecured U.S. notes:
Debentures, 8.38% to 9.88%,
due 2001 to 2017 444,215 444,215
Medium-term notes, 5.53% to 9.90%,
due 1998 to 2025 1,410,020 1,543,600
Discount on unsecured U.S. notes (21,196) (21,765)
Unsecured foreign obligations
(principally pound sterling),
4.84% to 11.00%, due 1998 to 2002 320,362 344,063
Other debt, including capital leases 48,175 63,206
----------- ----------
Total debt 2,568,915 2,436,968
Current portion (301,361) (199,958)
----------- ----------
Long-term debt $ 2,267,554 2,237,010
=========== ==========
Debt maturities (including sinking fund requirements) during the five years
subsequent to December 31, 1997 were as follows:
DEBT
In thousands MATURITIES
- ------------ ----------
1998 $301,361
1999 440,896
2000 499,585
2001 330,528
2002 530,475
37
<PAGE>
During 1997, the company entered into a $720 million global revolving
credit facility, which expires in 2002, and replaced existing credit facilities
in the U.S., U.K. and Canada. The prior U.S. credit facility consisted of a $500
million primary agreement with no expiration date and a $150 million secondary
agreement expiring in 2001. The global credit facility is primarily to be used
to finance working capital and provide support for the issuance of commercial
paper. At the company's option, the interest rate on borrowings under the global
credit facility is based on LIBOR, prime, federal funds or local equivalent
rates. No compensating balances are required under the global credit facility;
however, it does have an annual facility fee of 0.07% based on the company's
current credit rating. At December 31, 1997, foreign borrowings of $53 million
were outstanding under the credit facility and the company had $327 million
available under this agreement.
The company had other committed lines of credit at December 31, 1997
totaling $6 million, of which $3 million was available. The weighted average
interest rates for outstanding U.S. and Canadian commercial paper were 6.25% and
4.63%, respectively, at December 31, 1997.
During the fourth quarter of 1996, the company recorded an extraordinary
loss of $10 million (net of income tax benefit of $6 million) in connection with
the early retirement of $80 million of outstanding high coupon debt.
Interest paid totaled $196 million in 1997, $204 million in 1996 and $182
million in 1995. Interest rates have been modified by interest rate swap
agreements as discussed in the "Summary of Significant Accounting Policies"
footnote.
FINANCIAL INSTRUMENTS
At December 31, 1997 and 1996, the company had various interest rate swap
agreements outstanding with notional principal amounts of $61 million and $178
million, respectively. Such contracts had a weighted average interest rate of
5.84% and 6.31% at December 31, 1997 and 1996, respectively. The company
mitigates its exposure to credit loss in the event of nonperformance by the
counterparties by entering into transactions with financial institutions in the
high investment grade category of ratings by Standard & Poor's Ratings Group
and/or Moody's Investors Service.
The carrying amounts and estimated fair values of the company's liabilities
for debt (excluding capital leases) and interest rate swap agreements at
December 31, 1997 and 1996 were as follows:
1997 1996
---------------------- ---------------------
CARRYING FAIR CARRYING FAIR
In thousands AMOUNT VALUE AMOUNT VALUE
- ------------ ---------- --------- --------- ---------
Debt $2,524,837 2,631,065 2,377,750 2,453,868
Interest rate swaps 871 850 137 975
The fair values above were determined from dealer quotations and represent
the discounted future cash flows through maturity or expiration using current
rates and are effectively the amounts the company would pay or receive to
terminate the agreements or retire the debt. The fair values of all other
financial instruments approximate their carrying amounts.
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY COMMON RETAINED TRANSLATION
In thousands, except share and per share amounts STOCK EARNINGS ADJUSTMENT TOTAL
- ------------------------------------------------ ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
At January 1, 1995 $ 539,101 603,226 (13,303) 1,129,024
Net earnings -- 147,666 -- 147,666
Common stock dividends declared-$0.60 per share -- (47,372) -- (47,372)
Common stock issued under employee plans (519,871 shares)* 11,251 -- -- 11,251
Foreign currency translation adjustment -- -- (389) (389)
Other (155) -- -- (155)
---------- ---------- ---------- ----------
At December 31, 1995 550,197 703,520 (13,692) 1,240,025
Net loss -- (41,318) -- (41,318)
Common stock dividends declared-$0.60 per share -- (48,315) -- (48,315)
Common stock issued under employee plans (2,833,241 shares)* 63,710 -- -- 63,710
Common stock repurchased (4,152,700 shares) (122,870) -- -- (122,870)
Foreign currency translation adjustment -- -- 9,519 9,519
Other 5,255 -- -- 5,255
---------- ---------- ---------- ----------
At December 31, 1996 496,292 613,887 (4,173) 1,106,006
Net earnings -- 175,685 -- 175,685
Common stock dividends declared-$0.60 per share -- (45,859) -- (45,859)
Common stock issued under employee plans (2,778,372 shares)* 61,973 -- -- 61,973
Common stock repurchased (7,047,300 shares) (241,335) -- -- (241,335)
Foreign currency translation adjustment -- -- (6,949) (6,949)
Other 11,187 -- -- 11,187
---------- ---------- ---------- ----------
At December 31, 1997 $ 328,117 743,713 (11,122) 1,060,708
========== ========== ========== ==========
</TABLE>
*Net of common stock purchased from employees exercising stock options.
38
<PAGE>
During 1997, the company concluded a six-million-share repurchase program,
announced in October 1996, and initiated an additional six-million-share
repurchase program. The company has used a portion of the proceeds from the
sales of the automotive carrier business and consumer truck rental business to
repurchase shares of common stock in the open market. The company repurchased
7,047,300 shares at an average of $34.25 per share for an aggregate amount of
$241 million in 1997 and 4,152,700 shares at an average price of $29.59 per
share for an aggregate amount of $123 million in 1996.
At December 31, 1997, the company had 73,692,226 Preferred Stock Purchase
Rights (Rights) outstanding which expire in March 2006. The Rights contain
provisions to protect shareholders in the event of an unsolicited attempt to
acquire the company which is not believed by the board of directors to be in the
best interest of shareholders. The Rights are evidenced by common stock
certificates, are subject to antidilution provisions, and are not exercisable,
transferable or exchangeable apart from the common stock until ten days after a
person, or a group of affiliated or associated persons, acquires beneficial
ownership of 10% or more, or, in the case of exercise or transfer, makes a
tender offer for 10% or more of the company's common stock. The Rights entitle
the holder, except such an acquiring person, to purchase at the current exercise
price of $100, that number of the company's common shares which at the time
would have a market value of $200. In the event the company is acquired in a
merger or other business combination (including one in which the company is the
surviving corporation), each Right entitles its holder to purchase at the
current exercise price of $100 that number of common shares of the surviving
corporation which would then have a market value of $200. In lieu of common
shares, Rights holders can purchase 1/100 of a share of Series C Preferred Stock
for each Right. The Series C Preferred Stock would be entitled to quarterly
dividends equal to the greater of $10 per share or 100 times the common stock
dividend per share and have 100 votes per share, voting together with the common
stock. By action of the board of directors, the Rights may also be exchanged in
whole or in part, at an exchange ratio of one share of common stock per Right.
The Rights have no voting rights and are redeemable, at the option of the
company, at a price of $.01 per Right prior to the acquisition by a person or a
group of persons affiliated or associated persons of beneficial ownership of 10%
or more of the common stock.
EMPLOYEE STOCK OPTION AND STOCK PURCHASE PLANS OPTION PLANS
The company's stock option plans consist of the Profit Incentive Stock Plan for
certain non-officer employees, the 1980 and 1995 Stock Incentive Plans and Stock
for Merit Increase Replacement Plan for key employees and the 1997 Board of
Directors Stock Award Plan for non-employee directors. Option prices are the
fair market value of shares at the date of grant. Options granted under all
plans are for terms not exceeding 10 years and are exercisable cumulatively 20%
to 50% each year based on the terms of the grant. Awards under the 1980 and 1995
Stock Incentive Plans may be granted in tandem with stock appreciation rights,
limited stock appreciation rights and performance units. The key employee plans
also provide for restricted stock rights to these employees at no cost to them;
none were granted in 1997, 1996 or 1995. Awards under the 1997 Board of
Directors Stock Award Plan may be granted in tandem with restricted stock units
at no cost to the grantee; 47,673 units were granted in 1997. Compensation
expense is recognized as the restricted stock units vest over the periods
established for each grant.
<PAGE>
The following table summarizes the status of the company's stock option
plans:
Weighted
Average
Number Exercise
Shares in thousands of Shares Price
- ------------------- --------- --------
Outstanding at January 1, 1995 6,580 $ 22.88
Granted 1,140 25.10
Exercised (207) 19.90
Expired or canceled (89) 22.49
------ -------
Outstanding at December 31, 1995 7,424 23.31
Granted 1,312 29.35
Exercised (1,742) 23.29
Expired or canceled (116) 27.57
------ -------
Outstanding at December 31, 1996 6,878 24.33
Granted 1,339 35.08
Exercised (2,037) 22.85
Expired or canceled (180) 26.40
------ ------
Outstanding at December 31, 1997 6,000 $ 27.18
====== =======
The number of shares and weighted average price of options exercisable at
December 31, 1997, 1996 and 1995 were 3,373,000 shares at $23.87, 4,636,000
shares at $22.83, and 5,482,000 shares at $22.74, respectively. At December 31,
1997, 1996 and 1995, 1,566,000 shares, 2,535,000 shares and 3,232,000 shares,
respectively, were available for future grants under the terms of these plans.
Information about options in various price ranges at December 31, 1997
follows:
Shares in thousands Options Outstanding Options Exercisable
- -------------------- ------------------- -------------------
Remaining
Price Life Average Average
Range Shares (In Years) Price Shares Price
- ----- ------ ---------- ----- ------ -----
$10 - 20 313 3.3 $ 16.11 313 $ 16.11
20 - 25 1,487 3.8 22.26 1,193 21.88
25 - 30 2,871 6.6 27.19 1,867 26.45
30 - 37 1,329 9.5 35.25 -- --
----- ------ ------- ----- -------
6,000 6.4 $ 27.18 3,373 $ 23.87
===== ====== ======= ===== =======
PURCHASE PLANS. The Employee Stock Purchase Plan provides for periodic offerings
to substantially all U.S. and Canadian employees, with the exception of
executives who participate in the 1980 and 1995 Stock Incentive Plans, to
subscribe shares of the company's common stock at 85% of the fair market value
on
39
<PAGE>
either the date of offering or the last day of the purchase period, whichever is
less. The U.K. Stock Purchase Scheme provides for periodic offerings to
substantially all U.K. employees to subscribe shares of the company's common
stock at 85% of the fair market value on the date of the offering.
The following table summarizes the status of the company's stock purchase
plans.
Weighted
Average
Number Exercise
Shares in thousands of Shares Price
- ------------------- --------- --------
Outstanding at January 1, 1995 1,819 $22.87
Granted 41 20.66
Exercised (314) 22.89
Expired or canceled (172) 22.92
------ ------
Outstanding at December 31, 1995 1,374 22.79
Granted 1,608 23.96
Exercised (1,191) 22.85
Expired or canceled (138) 22.86
------ ------
Outstanding at December 31, 1996 1,653 23.88
Granted 63 30.28
Exercised (994) 23.96
Expired or canceled (151) 23.91
------ ------
Outstanding at December 31, 1997 571 $24.46
====== ======
The number of shares and weighted average price of options exercisable at
December 31, 1997 and 1995 were 472,000 shares at $23.96 and 1,318,000 shares at
$22.90, respectively. No options were exercisable at December 31, 1996.
Substantially all options outstanding expire in 1998. At December 31, 1997, 1996
and 1995, 323,000 shares, 235,000 shares and 1,705,000 shares, respectively,
were available for future grants under the terms of these plans.
PRO FORMA INFORMATION. The company accounts for stock-based compensation using
the intrinsic value method; accordingly, no compensation expense has been
recognized for its stock-based compensation plans. Had the fair value method of
accounting been applied to the company's plans, which requires recognition of
compensation expense over the vesting periods of the awards, net earnings (loss)
would have been reduced (increased) by $11 million, or $0.14 per diluted common
share in 1997, $(8) million, or $(0.10) per diluted common share in 1996, and $1
million, or $0.02 per diluted common share in 1995. This pro forma impact only
takes into account options granted since January 1, 1995 and is likely to
increase in future years as additional options are granted and amortized over
the vesting period.
The weighted average per share fair values of options granted under the
company's stock option and purchase plans during 1997, 1996 and 1995 were
$12.57, $8.45 and $8.99, respectively. The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted average assumptions: dividend yield of 1.8% in 1997 and
2.1% in 1996 and 1995; expected volatility of 24.5% in 1997 and 25.4% in 1996
and 1995; a risk-free interest rate of 6.2% in 1997 and 6.4% in 1996 and 1995;
and an expected holding period of eight years in 1997 and six years in 1996 and
1995.
EARNINGS PER SHARE INFORMATION. A reconciliation of the number of shares
used in computing basic and diluted EPS follows:
In thousands 1997 1996 1995
- ------------ ------ ------ ------
Weighted average
shares outstanding - Basic 76,888 81,263 78,945
Dilutive common stock equivalents
from option and purchase plans 1,304 -- 425
------ ------ ------
Weighted average
shares outstanding - Diluted 78,192 81,263 79,370
====== ====== ======
At December 31, 1997, options to purchase 1,129,000 shares of common stock
were outstanding but were not included in the computation of diluted EPS because
the options' exercise prices were greater than the average market price of the
common shares during the period.
PENSION AND SAVINGS PLANS
The company and its subsidiaries sponsor several defined benefit pension plans,
covering substantially all employees not covered by union-administered plans,
including certain employees in foreign countries. These plans generally provide
participants with benefits based on years of service and career-average
compensation levels. Funding policy for these plans is to make contributions
based on normal costs plus amortization of unfunded past service liability but
not greater than the maximum allowable contribution deductible for Federal
income tax purposes. The majority of the plans' assets are invested in a master
trust which, in turn, is primarily invested in listed stocks and bonds. The
company also contributed to various defined benefit, union-administered,
multi-employer plans for employees under collective bargaining agreements. Total
pension expense for 1997, 1996 and 1995 was as follows:
In thousands 1997 1996 1995
- ------------ --------- --------- ---------
Company-administered plans:
Present value of benefits
earned during the year $ 24,037 26,746 20,502
Interest cost on projected
benefit obligation 46,160 36,662 32,302
Return on plan assets:
Actual (142,195) (70,694) (110,289)
Deferred 82,117 25,715 76,793
Additional expense from
early retirement program -- 43,928 --
Curtailment gain (7,614) -- --
Other, net (1,037) (1,172) (1,522)
--------- --------- ---------
1,468 61,185 17,786
Union-administered plans 1,840 2,013 1,547
--------- --------- ---------
Net pension expense $ 3,308 63,198 19,333
========= ========= =========
As part of the company's 1996 restructuring and other profit improvement
initiatives, certain employees accepted early retirement benefits, which
increased 1996 pension expense by $44 million.
40
<PAGE>
The following table sets forth the plans' funded status and the company's
prepaid expense at December 31, 1997 and 1996:
In thousands 1997 1996
- ------------ --------- ---------
Plan assets at fair value $ 820,696 679,756
Actuarial present value of service
rendered to date:
Accumulated benefit obligation,
including vested benefits of $632,306 in
1997 and $548,528 in 1996 (664,138) (581,719)
Additional benefit based on estimated
future salary levels (44,576) (62,354)
--------- ---------
Projected benefit obligation (708,714) (644,073)
--------- ---------
Plan assets in excess of projected
benefit obligation 111,982 35,683
Unrecognized transition amount (11,838) (15,621)
Other, primarily unrecognized prior
service cost and net gains (55,428) (12,700)
--------- ---------
Prepaid pension expense $ 44,716 7,362
========= =========
The following table sets forth the actuarial assumptions used for the
company's dominant plan:
1997 1996
---- ----
Discount rate 7.25% 7.50%
Rate of increase in compensation levels 5.00% 5.00%
Expected long-term rate of return on plan assets 9.50% 8.50%
Transition amortization in years 8 8
Gain and loss amortization in years 8 8
The company also has defined contribution savings plans that cover
substantially all eligible employees. Company contributions to the plans are
based on employee contributions and the level of company match. Company
contributions to the plans totaled approximately $12 million in 1997 and 1996,
and $11 million in 1995.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The company and its subsidiaries sponsor plans which provide retired employees
with certain health care and life insurance benefits. Substantially all
employees not covered by union-administered health and welfare plans are
eligible for these benefits. Health care benefits for the company's principal
plans are generally provided to qualified retirees under age 65 and eligible
dependents. Generally, these plans require employee contributions which vary
based on years of service and include provisions which cap company
contributions.
Total periodic postretirement benefit expense for 1997, 1996 and 1995 was
as follows:
In thousands 1997 1996 1995
- ------------ ------- ------- -------
Current year service cost $ 1,569 1,626 1,373
Interest accrued on post-
retirement benefit obligation 3,122 2,790 3,031
Additional expense from early
retirement program -- 2,323 --
Curtailment gain (1,881) -- --
-------- ------- -------
Periodic postretirement
benefit expense $ 2,810 6,739 4,404
======= ======= =======
<PAGE>
The company's postretirement benefit plans are not funded. The company's
obligation under the plans as of December 31, 1997 and 1996 was as follows:
In thousands 1997 1996
- ------------ ------- -------
Accumulated postretirement
benefit obligation:
Retirees $28,258 33,860
Fully eligible active plan participants 4,114 8,964
Other active plan participants 11,914 16,474
------- -------
44,286 59,298
Unrecognized net gains 3,408 1,428
------- -------
Accrued unfunded postretirement
benefit obligation $47,694 60,726
======= =======
Discount rate 7.25% 7.50%
The actuarial assumptions include health care cost trend rates projected
ratably from 8% in 1998 to 6% in the year 2003 and thereafter. Increasing the
assumed health care cost trend rates by 1% in each year would not have had a
material effect on the accumulated postretirement benefit obligation as of
December 31, 1997 or periodic postretirement benefit expense for 1997.
ENVIRONMENTAL MATTERS
The company's operations involve storing and dispensing petroleum products,
primarily diesel fuel. In 1988, the Environmental Protection Agency issued
regulations that established requirements for testing and replacing underground
storage tanks. The company is involved in various stages of investigation,
cleanup and tank replacement to comply with the regulations. In addition, the
company received notices from the Environmental Protection Agency and others
that it has been identified as a potentially responsible party (PRP) under the
Comprehensive Environmental Response, Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act and similar state statutes and may
be required to share in the expense of cleanup of 25 identified disposal sites.
41
<PAGE>
The company records a liability for environmental assessments and/or
cleanup when it is probable a loss has been incurred. Generally, the timing of
these accruals coincides with the identification of an environmental problem
through the company's internal procedures or upon notification from regulatory
agencies. The estimate of loss is based on information obtained from independent
environmental engineers and/or from company experts regarding the nature and
extent of environmental contamination, remedial alternatives available and the
cleanup criteria required by relevant governmental agencies. The estimated costs
include amounts for anticipated site testing, consulting, remediation, disposal,
post-remediation monitoring and legal fees, as appropriate. These amounts
represent the estimated undiscounted costs to fully resolve the environmental
matters in accordance with prevailing Federal, state and local requirements
based on information presently available. The liability does not reflect
possible recoveries from insurance companies or reimbursement of remediation
costs by state agencies, but does include estimates of cost sharing with other
PRPs at Superfund sites. The company's environmental expenses, which included
remediation costs as well as normal recurring expenses such as licensing,
testing and waste disposal fees, were $5 million in 1997, $7 million in 1996 and
$12 million in 1995.
The ultimate costs of the company's environmental liabilities cannot be
projected with certainty due to the presence of several unknown factors,
primarily the level of contamination, the effectiveness of selected remediation
methods, the stage of investigation at individual sites, the determination of
the company's liability in proportion to other responsible parties and the
recoverability of such costs from third parties. Based on information presently
available, management believes that the ultimate disposition of these matters,
although potentially material to the results of operations in any one year, will
not have a material adverse effect on the company's financial condition or
liquidity.
OTHER MATTERS
The company is currently involved in litigation with a former customer
relating to a logistics services agreement which was terminated in 1997. The
former customer has filed a claim against the company and the company has filed
a counterclaim. Management believes that the resolution of this matter will not
have a material impact on the company's consolidated financial position,
liquidity or results of operations.
The company is also a party to various other claims, legal actions and
complaints arising in the ordinary course of business. While any proceeding or
litigation has an element of uncertainty, management believes that the
disposition of these matters will not have a material impact on the consolidated
financial position, liquidity or results of operations of the company.
GEOGRAPHIC INFORMATION
Revenue, earnings (loss) from continuing operations before income taxes and
identifiable assets pertaining to the geographic areas in which the company
operates are presented below.
In thousands 1997 1996 1995
- ------------ ----------- ----------- -----------
Revenue:
United States $ 4,233,119 4,417,225 4,137,245
Foreign 660,786 518,898 435,730
----------- ----------- -----------
$ 4,893,905 4,936,123 4,572,975
=========== =========== ===========
Earnings (loss) from
continuing operations
before income taxes:
United States $ 238,902 9,946 198,099
Foreign 25,050 (15,976) 19,886
----------- ----------- -----------
$ 263,952 (6,030) 217,985
=========== =========== ===========
Identifiable assets:
United States $ 4,683,012 4,815,928 5,165,600
Foreign 826,048 829,461 728,215
----------- ----------- -----------
$ 5,509,060 5,645,389 5,893,815
=========== =========== ===========
42
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENTAL FINANCIAL DATA
Ryder System, Inc. and Subsidiaries
QUARTERLY DATA Quarters
- -------------------------------------- -------------------------------------------------
In thousands, except per share amounts First Second Third Fourth
- -------------------------------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
1997 $1,187,119 1,233,999 1,204,339 1,268,448
1996 1,190,520 1,265,533 1,272,146 1,207,924
Earnings (loss) from continuing
operations:
1997 $ 32,451 43,328 35,278 49,181
1996 11,613 27,723 29,410 (88,169)
Net earnings (loss):
1997 $ 33,666 50,035 42,803 49,181
1996 10,179 31,583 26,288 (109,368)
Earnings (loss) from continuing operations
per common share:
1997-Basic $ 0.42 0.56 0.45 0.65
1996-Basic 0.15 0.35 0.36 (1.08)
1997-Diluted 0.41 0.55 0.45 0.64
1996-Diluted 0.15 0.34 0.36 (1.08)
Net earnings (loss) per common share:
1997-Basic $ 0.43 0.65 0.55 0.65
1996-Basic 0.13 0.39 0.32 (1.34)
1997-Diluted 0.43 0.64 0.54 0.64
1996-Diluted 0.13 0.39 0.32 (1.34)
</TABLE>
Quarterly and year-to-date computations of per share amounts are made
independently; therefore, the sum of per share amounts for the quarters may not
equal per share amounts for the year. Data for 1996 and first two quarters of
1997 has been restated to reflect the company's automotive carrier business as a
discontinued operation (see the "Divestitures" note to the consolidated
financial statements for a further discussion).
Earnings from continuing operations in the second, third and fourth
quarters of 1996 were impacted, in part, by after tax restructuring and other
charges of $10 million, $7 million and $133 million, respectively. In addition,
the fourth quarter of 1996 benefited from a $15 million after tax gain from the
sale of the company's consumer truck rental business.
Net earnings in the fourth quarter of 1996 were also impacted by a $10
million after tax extraordinary loss resulting from the early extinguishment of
debt at a premium.
COMMON STOCK DATA
At December 31, 1997 and 1996, the company had 73,692,226 and 77,961,154
shares, respectively, of common stock outstanding. As of January 30, 1998, there
were 16,943 common stockholders of record.
The company's common shares are traded on the New York Stock Exchange, the
Chicago Stock Exchange and the Pacific Stock Exchange, and its ticker symbol is
"R." The company's shares are also traded on the Berlin Stock Exchange and the
ticker symbol is "RYD GR." Quarterly market price ranges of the common shares
and quarterly cash dividends on common shares during 1997 and 1996 were as
follows:
Market Price
----------------------------------
Common Share
1997 1996 Cash Dividends
------------------ --------------- ---------------
High Low High Low 1997 1996
------- -------- ------ ------ ----- -----
First quarter $32 3/4 27 1/8 29 1/8 22 5/8 .15 .15
Second quarter 34 5/8 28 7/8 30 25 3/4 .15 .15
Third quarter 36 1/2 33 1/4 31 1/8 24 3/4 .15 .15
Fourth quarter 37 1/8 31 13/16 30 7/8 27 7/8 .15 .15
43
<PAGE>
<TABLE>
<CAPTION>
FIVE YEAR SUMMARY
Dollars in thousands, except per share amounts 1997 1996 1995 1994 1993
- ---------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenue $4,893,905 4,936,123 4,572,975 4,040,201 3,582,396
Earnings (loss) from continuing operations (a):
Before income taxes $ 263,952 (6,030) 217,985 207,071 174,180
After income taxes $ 160,238 (19,423) 128,023 121,800 94,092
Per diluted common share (a) $ 2.05 (0.24) 1.61 1.55 1.21
Net earnings (loss) (b) $ 175,685 (41,318) 147,666 153,529 (61,424)
Per diluted common share (b) $ 2.25 (0.51) 1.86 1.95 (0.84)
---------- ---------- ---------- ---------- ---------
Cash dividends per common share $ 0.60 0.60 0.60 0.60 0.60
Average number of common shares-
diluted (in thousands) 78,192 81,263 79,370 78,768 77,535
Average common equity $1,126,029 1,261,101 1,176,373 1,057,931 1,266,715
Return on average common equity (%) (c) 15.3 (3.3) 13.2 14.5 10.2
Book value per common share $ 14.39 14.19 15.64 14.33 12.81
Market price-high (d) $ 37 1/8 31 1/8 26 1/8 28 26 5/8
Market price-low (d) $ 27 1/8 22 5/8 21 19 7/8 24 3/4
---------- ---------- ---------- ---------- ---------
Total debt $2,568,915 2,436,968 2,623,101 1,912,898 1,531,446
Long-term debt $2,267,554 2,237,010 2,411,024 1,794,795 1,374,943
Debt to equity (%) 242 220 212 169 155
Debt to tangible equity (%) 318 289 273 227 202
---------- ---------- ---------- ---------- ----------
Year-end assets $5,509,060 5,645,389 5,893,815 5,014,473 4,258,388
Return on average assets (%) (e) 3.0 (0.5) 2.4 2.8 2.0
Average asset turnover (%) (f) 91.2 87.3 86.4 91.3 79.6
---------- ---------- ---------- ---------- ----------
Cash flow from continuing operating activities
and asset sales $ 960,304 905,983 1,115,015 1,017,921 929,650
Capital expenditures, including capital leases (f) $1,041,515 1,259,835 2,088,763 1,726,373 1,026,476
---------- ---------- ---------- ---------- ---------
Number of vehicles (f) 162,665 161,749 197,029 179,725 158,374
Number of employees (f) 42,342 40,287 39,740 37,326 32,655
---------- ---------- ---------- ---------- ---------
<FN>
- ----------
(a) Loss from continuing operations for 1996 includes the effect of a $25
million ($15 million after tax, or $0.18 per common share) gain resulting
from the sale of the consumer truck rental business, offset by $228 million
($150 million after tax, or $1.84 per common share) of restructuring and
other charges.
(b) Net earnings for 1997 include an after tax gain on sale of discontinued
operations of $3 million ($0.04 per common share). Net loss for 1996
includes, in addition to the items discussed in (a) above, an after tax
extraordinary loss of $10 million ($0.12 per common share) relating to the
early extinguishment of debt at a premium. Net earnings for 1995 include the
cumulative effect of a change in accounting for charitable contributions
resulting in an after tax charge of $8 million ($0.10 per common share). Net
loss for 1993 includes the cumulative effect of a change in accounting for
postretirement benefits other than pensions resulting in an after tax charge
of $25 million ($0.33 per common share), and an after tax charge of $169
million ($2.18 per common share) related to the discontinued aviation
services subsidiaries. Net earnings (loss) for all years include the results
of discontinued operations.
(c) Excludes the cumulative effect of changes in accounting and special charges
and gains related to discontinued operations.
(d) On December 7, 1993, the company completed the spin off of its aviation
services subsidiaries by distributing to common stockholders one share of
Aviall, Inc. common stock valued at $16.25 for each four Ryder System, Inc.
common shares owned. The high and low presented for 1993 were the values of
the company's common stock after the spin off. The high and low for 1993
prior to the spin off were 33 1/2 and 26 1/4, respectively.
(e) Excludes the cumulative effect of changes in accounting and discontinued
operations.
(f) Excludes discontinued operations.
</FN>
</TABLE>
44
EXHIBIT 21.1
RYDER SYSTEM, INC.
SUBSIDIARIES AS OF FEBRUARY 1, 1998
STATE/COUNTRY OF
NAME OF COMPANY INCORPORATION
ATE Management of Duluth, Inc. Minnesota
Cape Area Transportation Systems, Inc. Massachusetts
Central Virginia Transit Management Company, Inc. Virginia
Commuter Services, Inc. Virginia
Disposition Holding Corp. Florida
Far East Freight, Inc. Florida
Forrest Rental Services Limited England
H.N.S. Management Company, Inc. Connecticut
Manufacturing Holding Corp. Florida
Merrimack Valley Area Transportation Co., Corp. Massachusetts
Mid-South Transportation Management, Inc. Tennessee
Mitchell Self Drive Limited England
Network Sales, Inc. (1) Tennessee
Network Vehicle Central, Inc. Florida
Old Dominion Transit Management Company Virginia
Paratransit Brokerage Services, Inc. Massachusetts
Parking Management of Southwest Virginia, Inc. Virginia
Road Master, Limited Bermuda
RSI Acquisition Corp. Delaware
RSI Purchase Corp. Delaware
RTA Transit Services, Inc. Massachusetts
Ryder Argentina S.R.L. Argentina
Ryder/ATE, Inc. Delaware
Ryder Capital S.A. de C.V. Mexico
RYDERCORP Florida
RYDERCORP, Inc. Delaware
Ryder de Mexico S.A. de C.V. Mexico
Ryder Dedicated Capacity, Inc. Tennessee
Ryder Dedicated Logistics, Inc. (2) Delaware
Ryder Dedicated Logistics Limited England
Ryder Deutschland GmbH West Germany
Ryder Distribution Services Limited England
Ryder do Brasil Ltda. Brazil
Ryder Driver Leasing, Inc. Florida
Ryder Energy Distribution Corporation Florida
<PAGE>
Ryder (Europe) Limited England
Ryder Integrated Logistics, Inc. Delaware
Ryder International, Inc. Florida
Ryder Mexicana, S.A. de C.V. Mexico
Ryder Netherlands B.V. Netherlands
Ryder Pension Fund Limited England
Ryder Plc England
Ryder Polska Sp. z o. o. Poland
Ryder Public Transportation Services, Inc. Florida
Ryder Puerto Rico, Inc. Delaware
Ryder Realty, Inc. Delaware
Ryder Services Corporation (3) Florida
Ryder Servicios do Brasil Ltda. Brazil
Ryder Servicios S.A. de C.V. Mexico
Ryder St. Louis Redevelopment Corporation Missouri
Ryder Student Transportation Services, Inc. (4) Florida
Ryder System, B.V. Netherlands
Ryder System Holdings (UK) Limited England
Ryder System Limited England
Ryder Transport Services Limited England
Ryder Transportation Limited England
Ryder Truck Rental, Inc. (5) Florida
Ryder Truck Rental Canada Ltd. (6) Canada
Ryder Truck Rental Limited England
Ryder Truckstops, Inc. Florida
Ryder Vehicle Leasing & Sales Corp. Barbados
Saunders Leasing System of Canada Limited - being dissolved Canada
Southwestern Virginia Transit Management Company, Inc. Virginia
Spring Hill Integrated Logistics Management, Inc. Delaware
Surplus Property Holding Corp. Florida
Transit Management Company of Laredo Texas
Transit Management of Alexandria, Inc. Virginia
Transit Management of Charlotte, Inc. North Carolina
Transit Management of Connecticut, Inc. Connecticut
Transit Management of Decatur, Inc. Illinois
Transit Management of Durham, Inc. North Carolina
Transit Management of Great Falls, Inc. Montana
Transit Management of Nashua, Inc. New Hampshire
Transit Management of Racine, Inc. Wisconsin
Transit Management of Richland, Inc. Ohio
Transit Management of St. Joseph, Inc. Missouri
Transit Management of Spartanburg, Inc. South Carolina
Transit Management of Tucson, Inc. Arizona
Transit Management of Tyler, Inc. Texas
Transit Management of Washoe, Inc. Nevada
Transit Management of Waukesha, Inc. Wisconsin
Page 2 of 4
<PAGE>
Unilink Contract Hire Limited England
UniRyder Limited England
United Contract Hire Limited England
Westland Trailer Co., S.A. de C.V. - being dissolved Mexico
Westside Corporate Center, Inc. Florida
- ----------------------
(1) Ontario, Canada: d/b/a Vehicle Network Sales
(2) Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida,
Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland,
Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Jersey, New York,
North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South
Dakota, Tennessee, Texas, Utah, Virginia and Washington: d/b/a LogiCorp.
Florida: d/b/a UniRyder
(3) New Jersey, Ohio and Texas: d/b/a Ryder Claims Services Corporation
(4) California, Colorado, Connecticut, Illinois, Minnesota, Missouri, Montana
and New Jersey: d/b/a Ryder Transportation
California: d/b/a Ryder
Colorado: d/b/a Grand Connection
Massachusetts: d/b/a DePalma Transportation Sales
Minnesota: d/b/a Kare Kabs
New York: d/b/a Ryder Student Transportation
Rhode Island: d/b/a Ryder Student Transportation Sales
Page 3 of 4
<PAGE>
(5) Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut,
Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New
Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota,
Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South
Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West
Virginia, Wisconsin and Wyoming: d/b/a Ryder Transportation Services
Maryland and Virginia: d/b/a Ryder/Jacobs
Michigan: d/b/a Atlas Trucking, Inc.
Michigan: d/b/a Ryder Atlas of Western Michigan
(6) French Name: Location de Camions Ryder du Canada Ltee.
Canadian Provinces: Ryder Integrated Logistics
Page 4 of 4
EXHIBIT 23.1
The Board of Directors and Shareholders
Ryder System, Inc.
Page 1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
Ryder System, Inc.:
We consent to incorporation by reference in the following Registration
Statements on Forms S-3 and S-8 of Ryder System, Inc. of our report dated
February 4, 1998, relating to the consolidated balance sheets of Ryder System,
Inc. and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations and cash flows for each of the years in
the three-year period ended December 31, 1997, which report is incorporated by
reference in the December 31, 1997 annual report on Form 10-K of Ryder System,
Inc.:
Form S-3:
/bullet/ Registration Statement No. 33-20359 covering $1,000,000,000
aggregate principal amount of debt securities.
/bullet/ Registration Statement No. 33-50232 covering $800,000,000
aggregate principal amount of debt securities.
/bullet/ Registration Statement No. 33-58667 covering $800,000,000
aggregate principal amount of debt securities.
Form S-8:
/bullet/ Registration Statement No. 33-20608 covering the Ryder System
Employee Stock Purchase Plan.
/bullet/ Registration Statement No. 33-4333 covering the Ryder
Employee Savings Plan.
/bullet/ Registration Statement No. 1-4364 covering the Ryder System
Profit Incentive Stock Plan.
/bullet/ 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
/bullet/ Registration Statement No. 33-37677 covering the Ryder System
UK Stock Purchase Scheme.
/bullet/ Registration Statement No. 33-442507 covering the Ryder
Student Transportation Services, Inc. Retirement /Savings
Plan.
/bullet/ Registration Statement No. 33-63990 covering the Ryder
System, Inc. Directors' Stock Plan.
/bullet/ Registration Statement No. 33-58001 covering the Ryder
System, Inc. Employee Savings Plan A.
/bullet/ Registration Statement No. 33-58003 covering the Ryder
System, Inc. Employee Savings Plan B.
/bullet/ Registration Statement No. 33-58045 covering the Ryder
System, Inc. Savings Restoration Plan.
/bullet/ Registration Statement No. 33-61509 covering the Ryder
System, Inc. Stock for Merit Increase Replacement Plan.
/bullet/ Registration Statement No. 33-62013 covering the Ryder
System, Inc. 1995 Stock Incentive Plan.
/bullet/ Registration Statement No. 333-19515 covering the Ryder
System, Inc. Deferred Compensation Plan.
/bullet/ Registration Statement No. 333-26653 covering the Ryder
System, Inc. Board Of Directors Stock Award Plan.
/s/ KPMG PEAT MARWICK LLP
- -------------------------
Miami, Florida
March 30, 1998
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ JOSEPH L. DIONNE
-----------------------------
Joseph L. Dionne
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared Joseph L. Dionne, personally known to me and known to me to
be the person described in and who executed the foregoing instrument, and
acknowledged to and before me this 19th day of February, 1998 that he or she
executed said instrument for the purposes therein expressed.
Witness my hand and official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ EDWARD T. FOOTE II
-----------------------------
Edward T. Foote II
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared Edward T. Foote II, personally known to me and known to me to
be the person described in and who executed the foregoing instrument, and
acknowledged to and before me this 19th day of February, 1998 that he or she
executed said instrument for the purposes therein expressed.
Witness my hand official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ JOHN A. GEORGES
-----------------------------
John A. Georges
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared John A. Georges, personally known to me and known to me to be
the person described in and who executed the foregoing instrument, and
acknowledged to and before me this 19th day of February, 1998 that he or she
executed said instrument for the purposes therein expressed.
Witness my hand and official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ VERNON E. JORDAN, JR.
-----------------------------
Vernon E. Jordan, Jr.
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared Vernon E. Jordan Jr., personally known to me and known to me
to be the person described in and who executed the foregoing instrument, and
acknowledged to and before me this 19th day of February, 1998 that he or she
executed said instrument for the purposes therein expressed.
Witness my hand and official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ DAVID T. KEARNS
-----------------------------
David T. Kearns
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared David T. Kearns, personally known to me and known to me to be
the person described in and who executed the foregoing instrument, and
acknowledged to and before me this 19th day of February, 1998 that he or she
executed said instrument for the purposes therein expressed.
Witness my hand and official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ LYNN M. MARTIN
-----------------------------
Lynn M. Martin
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared Lynn M. Martin, personally known to me and known to me to be
the person described in and who executed the foregoing instrument, and
acknowledged to and before me this 19th day of February, 1998 that he or she
executed said instrument for the purposes therein expressed.
Witness my hand and official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ PAUL J. RIZZO
-----------------------------
Paul J. Rizzo
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared Paul J. Rizzo, personally known to me and known to me to be
the person described in and who executed the foregoing instrument, and
acknowledged to and before me this 19th day of February, 1998 that he or she
executed said instrument for the purposes therein expressed.
Witness my hand and official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ CHRISTINE A. VARNEY
-----------------------------
Christine A. Varney
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared Christine A. Varney, personally known to me and known to me
to be the person described in and who executed the foregoing instrument, and
acknowledged to and before me this 19th day of February, 1998 that he or she
executed said instrument for the purposes therein expressed.
Witness my hand and official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Vicki A. O'Meara, Edward R. Henderson and Maria
C. Matias, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the undersigned
and in his or her name, place and stead, in any and all capacities, to sign the
Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange
Act of 1934) for the fiscal year ended December 31, 1997 (the "Form 10-K"), and
any and all amendments thereto, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission and with the New York Stock Exchange, Chicago Stock Exchange and
Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full
power and authority to perform every act requisite and necessary to be done in
connection with the execution and filing of the Form 10-K and any and all
amendments thereto, as fully for all intents and purposes as he or she might or
could do in person, hereby ratifying all that each said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
/s/ ALVA O. WAY
-----------------------------
Alva O. Way
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me appeared Alva O. Way, personally known to me and known to me to be the
person described in and who executed the foregoing instrument, and acknowledged
to and before me this 19th day of February, 1998 that he or she executed said
instrument for the purposes therein expressed.
Witness my hand and official seal:
/s/ TINKIE E. DEMMIN
-----------------------------
Notary Public
[STAMPED]
Official Notary Seal
Tinkie E. Demmin
Notary Public State of Florida
Commission No. CC470611
My commission expires: July 20, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RYDER
SYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF
OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 78,370 191,384
<SECURITIES> 0 0
<RECEIVABLES> 625,955 561,927
<ALLOWANCES> 0 0
<INVENTORY> 66,006 61,345
<CURRENT-ASSETS> 1,091,985 1,147,766
<PP&E> 6,099,932 6,410,560
<DEPRECIATION> 2,372,766 2,509,361
<TOTAL-ASSETS> 5,509,060 5,645,389
<CURRENT-LIABILITIES> 1,089,509 1,154,955
<BONDS> 2,267,554 2,237,010
0 0
0 0
<COMMON> 328,117 496,292
<OTHER-SE> 732,591 609,714
<TOTAL-LIABILITY-AND-EQUITY> 5,509,060 5,645,389
<SALES> 0 0
<TOTAL-REVENUES> 4,893,905 4,936,123
<CGS> 0 0
<TOTAL-COSTS> 4,440,592 4,735,517
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 189,361 206,636
<INCOME-PRETAX> 263,952 (6,030)
<INCOME-TAX> 103,714 13,393
<INCOME-CONTINUING> 160,238 (19,423)
<DISCONTINUED> 15,447 (11,864)
<EXTRAORDINARY> 0 (10,031)
<CHANGES> 0 0
<NET-INCOME> 175,685 (41,318)
<EPS-PRIMARY> 2.28 (0.51)
<EPS-DILUTED> 2.25 (0.51)
</TABLE>
