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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, 1998
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: [ ]
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 29, 1999, was $1,740,111,477. The number of shares of Ryder System, Inc.
Common Stock ($.50 par value) outstanding as of January 29, 1999, was
71,287,995.
DOCUMENTS INCORPORATED BY PART OF FORM 10-K INTO WHICH
REFERENCE INTO THIS REPORT DOCUMENT IS INCORPORATED
------------------------------ ----------------------------
Ryder System, Inc. 1998 Annual Parts I, II and IV
Report to Shareholders*
Ryder System, Inc. 1999 Proxy Part III
Statement
*The Ryder System, Inc. 1998 Annual Report to Shareholders is incorporated
herein only to the extent specifically stated.
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[Cover page 1 of 3 pages]
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. 6 1/2% Series O Notes, None
due May 15, 2005
Ryder System, Inc. 6.60% Series P Notes, None
due November 15, 2005
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
[Cover page 2 of 3 pages]
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
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
Ryder System, Inc. Medium-Term Notes, None
Series 15, 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]
RYDER SYSTEM, INC.
Annual Report on Form 10-K
TABLE OF CONTENTS
PAGE NO.
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PART I
Item 1 Business..................................................... 5
Item 2 Properties................................................... 10
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 7A Quantitative and Qualitative Disclosures About Market Risk .. 11
Item 8 Financial Statements and Supplementary Data.................. 12
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 12
PART III
Item 10 Directors and Executive Officers of the Registrant........... 13
Item 11 Executive Compensation....................................... 13
Item 12 Security Ownership of Certain Beneficial Owners and
Management................................................. 13
Item 13 Certain Relationships and Related Transactions............... 13
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K................................................... 14
4
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 related services business with focus on: 1) integrated logistics,
including dedicated contract carriage, the management of carriers, and other
supply chain services; 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. As of December 31, 1998, the
Company and its subsidiaries had a fleet of 173,116 vehicles and 45,373
employees.(1)
Financial information about industry segments is incorporated by reference from
the "Notes to Consolidated Financial Statements - Segment Reporting" on pages 44
and 45 of the Ryder System, Inc. 1998 Annual Report to Shareholders.
LOGISTICS AND TRANSPORTATION BUSINESS UNITS
INTEGRATED LOGISTICS
Ryder Integrated Logistics, Inc. ("Ryder Integrated Logistics") provides
integrated logistics support of clients' entire supply chains, from inbound raw
materials supply through finished goods distribution, including dedicated
contract carriage, the management of carriers, and other supply chain services
through 735 locations in the U.S. and Canada. 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
inbound and outbound just-in-time and merge-in-transit 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 1998, Ryder
Integrated Logistics continued to expand its presence in the logistics market
through expansion of existing accounts, increased emphasis on global account
management in key industry sectors, and initiation of strategic alliances/joint
ventures.
INTERNATIONAL OPERATIONS
The Company provides a wide variety of logistics and transportation services in
international markets outside the U.S. and Canada, including full service
leasing of trucks, tractors and trailers, commercial truck rental, contract
truck maintenance and a broad range of warehousing, logistics and supply chain
management services. The Company continues to implement a strategy for further
growth in international markets, providing global logistics solutions to
multinational customers.
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(1) The employee count 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 reimburses the
Company's subsidiaries); or (b) drivers obtained by certain subsidiaries of the
Company under driver leasing agreements.
5
This strategy enables the Company to take 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. As of December
31, 1998, the Company had 13,209 full service lease and commercial rental
vehicles, 5,310 employees, and provided services through 140 locations in the
United Kingdom, Germany, Mexico, Poland, the Netherlands, Argentina and Brazil.
In 1998, the Company continued to enhance its presence in the United Kingdom,
Mexico, Poland, Argentina and Brazil through internal growth, and also commenced
both assessing and exploiting opportunities in markets in other countries. In
its worldwide operations, the Company is always mindful of its need to mitigate
risks, including the minimization of asset and currency exposures.
Within the context of international operations, the Company defines national
service as the provision of services within the confines of one particular
foreign country. International services require the management of the movement
of goods across borders; while global services include both of the foregoing for
customers with needs in a number of international markets who may also require
multinational coordination of logistic and supply chain management services.
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 leasing to nearly
13,000 customers (ranging from large national enterprises to small companies),
with a fleet of 109,124 vehicles (including 14,751 vehicles leased to
affiliates), through 894 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
1,500 customers, servicing 44,856 vehicles (including approximately 9,560
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 37,517
vehicles, ranging from heavy-duty tractors and trailers to light-duty trucks, is
available for commercial short-term rental. In 1998, 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 1998, Ryder Transportation
Services continued to develop its expanded range of services for customers. Such
services include fleet management, freight management and the Ryder Citicorp
Finance Lease program. 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's public sector services are organized under a single management
structure for operating efficiencies and in order to focus its marketing efforts
on serving the unique needs of the public sector. 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 10,200 school buses under long-term contract for 477 school systems in 26
states; and Ryder/ATE, Inc., which operates or manages nearly 5,000 buses under
long-term contracts to 86 public transit agencies in 28 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 the Company's ability to provide the same or enhanced levels of services,
typically at a 10 to 20 percent cost savings, a growing number of governmental
organizations are willing to outsource their transportation and fleet
maintenance services to Ryder Public Transportation Services.
6
In 1998, Ryder Public Transportation Services expanded through various methods,
including acquisitions, increasing its fleet size by more than 600 buses in the
student transportation operation.
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 12%, 11% and 14% of earnings from reportable business segments
before interest and taxes in 1998, 1997 and 1996, 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 United States 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, waterborne shipping, railroads and motor
carriers. On a country-by-country basis and on a global basis, the Company
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. Ryder Integrated Logistics expects that competition with its
services in 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 1,500 small
and regional companies compete with Ryder Student Transportation Services on a
limited, local market basis. In the public transit market, one national
competitor is larger than Ryder/ATE, and less than 100 small and regional
companies compete with Ryder/ATE 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.
7
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 the 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 affect
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 1, 1998 in conjunction with the Company's 1998 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 56 Chairman, President and
Chief Executive Officer
Dwight D. Denny 55 Executive Vice President - Development
John H. Dorr 52 President - Ryder Public Transportation
Services, Inc.
Raymond B. Greer 36 President - Ryder Integrated Logistics, Inc.
James B. Griffin 44 President - Ryder Transportation Services
Edwin A. Huston 60 Senior Executive Vice President -
Finance and Chief Financial Officer
Thomas E. McKinnon 54 Executive Vice President - Human
Resources and Corporate Services
Vicki A. O'Meara 41 Executive Vice President, General Counsel and
Secretary
Lisa A. Rickard 43 Senior Vice President - Government Relations
George P. Scanlon 41 Senior Vice President - Planning and Controller
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.
8
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, 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.
Raymond B. Greer has been President - Ryder Integrated Logistics, Inc. since
December 1998. Mr. Greer served as Senior Vice President and General Manager -
Global Operations from March 1998 to December 1998, as Senior Vice President -
Information and Logistics Services from March 1997 to March 1998, as a Regional
Vice President and General Manager from January 1995 to March 1997, and as a
Regional Distribution Manager from May 1994 to January 1995. Previously, Mr.
Greer spent 11 years with Federal Express in various operational, engineering
and technology capacities, most recently as Global Contract Director for FedEx
Logistics.
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 and Secretary since February 1998. 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 Senior Vice President - Planning and Controller since
August 1998 and served as Vice President - Planning and Controller from 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.
9
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.
Ryder Integrated Logistics, Inc. has 735 locations in the United States and
Canada; 5 of these facilities are owned and the remainder are leased. Such
locations generally include a warehouse and administrative offices.
The Company's international operations has 140 locations in the United Kingdom,
Germany, The Netherlands, Mexico, Poland, Argentina, and Brazil; 21 of these
facilities are owned and the remainder are leased. Such locations generally
include a repair shop, warehouse and administrative offices.
Ryder Transportaton Services has 894 locations in the United States, Puerto Rico
and Canada; 385 of these facilities are owned and the remainder are leased. Such
locations generally include a repair shop and administrative offices.
Ryder Public Transportation Services has 340 locations in the United States; all
of which are leased.
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 operations
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, 1998.
10
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 46
("Quarterly Financial and Common Stock Data") of the Ryder System, Inc. 1998
Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is incorporated by reference from page 46
("Five Year Summary") of the Ryder System, Inc. 1998 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 27 of the Ryder System, Inc. 1998 Annual Report to Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, the Company is exposed to fluctuations in
interest rates and foreign exchange rates. The Company manages such exposures in
several ways including the use of a variety of derivative financial instruments
when deemed prudent. The Company does not enter into leveraged financial
transactions or use derivative financial instruments for trading purposes.
The exposure to market risk for changes in interest rates relates primarily to
debt obligations. The Company's interest rate risk management program objective
is to limit the impact of interest rate changes on earnings and cash flows and
to lower overall borrowing costs. The Company manages its exposure to interest
rate risk through the proportion of fixed rate and variable rate debt in the
total debt portfolio. The Company targets variable rate debt levels at 25%-30%
of total financing obligations, including the present value of off-balance sheet
obligations such as operating leases. From time to time, the Company also uses
interest rate swap and cap agreements to manage its fixed rate and variable rate
exposure and to better match the repricing of its debt instruments to that of
its portfolio of assets. No interest rate swap or cap agreements were
outstanding at December 31, 1998.
The following table summarizes debt obligations outstanding as of December 31,
1998 expressed in U.S. dollar equivalents. The table shows the amount of debt,
including current portion, and related weighted average interest rates by
contractual maturity dates. Weighted average variable rates are based on implied
forward rates in the yield curve at December 31, 1998. This information should
be read in conjunction with the "Notes to Consolidated Financial
Statements-Debt" contained in the Ryder System, Inc. 1998 Annual Report to
Shareholders.
11
DECEMBER 31,
-----------------------------------------------------------------------------------
EXPECTED MATURITY DATE
-----------------------------------------------------------------------------------
(Dollars in thousands) 1999 2000 2001 2002 2003 THEREAFTER TOTAL FAIR VALUE
- ----------------------------------- -------- ------- ------- ------- ------ ---------- ---------- ---------
Total Fixed Rate-Dollar Denominated $374,270 443,738 281,287 107,502 92,657 691,350 1,990,804 2,060,816
Average interest rate 7.54% 7.41% 7.33% 7.33% 7.47% 7.51%
Total Fixed Rate-Pound Sterling Denominated 24,893 24,893 24,893 58,083 - - 132,762 136,587
Average interest rate 8.06% 8.17% 8.17% 7.88% - -
Total Fixed Rate-Canadian Dollars 22,873 19,605 22,873 - 9,803 - 75,154 75,356
Average interest rate 7.22% 7.12% 6.49% 5.75% 5.75% -
Total Fixed Rate-Brazilian Real 7,917 2,115 1,070 840 227 - 12,169 12,328
Average interest rate 8.00% 8.00% 8.00% 8.00% 8.00% -
Total Fixed Rate-German Deutsche Mark 2,697 3,256 3,256 1,458 1,458 3,600 15,725 16,640
Average interest rate 5.47% 5.57% 5.67% 5.88% 5.91% 5.96%
Total Variable Rate Commercial Paper (a) - - - 197,500 - - 197,500 197,500
Average interest rate 5.08% 5.02% 5.05% 5.56% - -
Total Variable Rate-Dollar Denominated - - - 9,382 - - 9,382 9,382
Average interest rate 5.19% 5.13% 5.17% 5.69% - -
Total Variable Rate-Pound Sterling Denominated 34,850 - - 54,764 - - 89,614 89,614
Average interest rate 5.68% 5.67% 5.48% 5.40% - -
Total Variable Rate-Canadian Dollar - - - 18,102 - - 18,102 18,102
Average interest rate 5.11% 5.24% 5.41% 5.53% - -
Total Variable Rate-German Deutsche Mark - - - 4,615 - - 4,615 4,615
Average interest rate 3.57% 3.56% 3.84% 4.11% - -
Total Variable Rate-Argentine Peso 2,500 - - - - - 2,500 2,500
Average interest rate 11.50% - - - - -
---------- ---------
Total Debt (b) $2,548,327 2,623,440
========== =========
(a) Assumed to be renewed through June 2002. As discussed in the "Debt" note to
the consolidated financial statements contained in the 1998 Annual Report to
Shareholders, the commercial paper program is supported by the Company's
$720 million global credit facility which is scheduled to expire in June
2002. The Company classified commercial paper borrowings as long-term debt
in the consolidated balance sheet at December 31, 1998.
(b) Excludes capital leases.
The exposure to market risk for changes in foreign exchange rates relates
primarily to foreign operations' buying, selling and financing in currencies
other than local currencies and to the carrying value of net investments in
foreign subsidiaries. The Company manages its exposure to foreign exchange rate
risk related to foreign operations' buying, selling and financing in currencies
other than local currencies by naturally offsetting assets and liabilities not
denominated in local currencies. The Company also uses foreign currency option
contracts and forward agreements to preserve the carrying value of foreign
currency assets, liabilities, commitments and anticipated foreign currency
transactions. No foreign currency option contracts or forward agreements were
outstanding at December 31, 1998. The Company does not generally hedge the
translation exposure related to its net investment in foreign subsidiaries.
Based on the overall level of transactions denominated in other than local
currencies and of the net investment in foreign subsidiaries, the exposure to
market risk for changes in foreign exchange rates is not material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 is incorporated by reference from pages 29
through 45 and page 46 ("Quarterly Financial and Common Stock Data") of the
Ryder System, Inc. 1998 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
12
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. 1999 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 17 ("Section 16(a) Beneficial Ownership Reporting Compliance") of the Ryder
System, Inc. 1999 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from pages 9
and 10 ("Compensation of Directors") and 21 through 24 of the Ryder System, Inc.
1999 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from pages 16
and 17 of the Ryder System, Inc. 1999 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. 1999 Proxy Statement.
13
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 F are incorporated by reference from pages 28 through 45
of the Ryder System, Inc. 1998 Annual Report to Shareholders.
A) Consolidated Statements of Operations for years ended December 31,
1998, 1997 and 1996.
B) Consolidated Balance Sheets as of December 31, 1998 and 1997.
C) Consolidated Statements of Cash Flows for years ended December 31,
1998, 1997 and 1996.
D) Consolidated Statements of Shareholders' Equity for years ended
December 31, 1998, 1997 and 1996.
E) Notes to Consolidated Financial Statements.
F) 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 46 of the Ryder
System, Inc. 1998 Annual Report to Shareholders.
14
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.
15
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. 1998 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, 1997, is
incorporated by reference to this report.
10.3(b) The Ryder System, Inc. 1999 Incentive Compensation Plan for
Headquarters Executive Management Levels MS 11 and Higher.
10.4(a) The form of Ryder System, Inc. 1980 Stock Incentive Plan, as amended
and restated as of August 15, 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, 1997, is incorporated by reference
into this report.
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 form of Ryder System, Inc. 1995 Stock Incentive Plan, as amended
and restated as of August 15, 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, 1997, is incorporated by reference
into this report.
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 form of Ryder System, Inc. Directors Stock Award Plan dated as of
May 2, 1997, previously filed with the Commission as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December
31, 1997, is incorporated by reference into this report.
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
16
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 form of Ryder System, Inc. Stock for Merit Increase Replacement
Plan, as amended and restated as of August 15, 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, 1997, is incorporated by
reference into this report.
10.9(b) The form of Ryder System, Inc. Non-Qualified Stock Option Agreement,
dated as of February 17, 1998.
10.10 The form of Ryder System, Inc. Deferred Compensation Plan effective
January 1, 1997, as amended and restated as of November 3, 1997,
previously filed with the Commission as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, is
incorporated by reference into this report.
10.11 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.
10.12 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 16, 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. 1998 Annual Report to
Shareholders. Those portions of the Ryder System, Inc. 1998 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
David I. Fuente
17
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:
No such reports were filed.
(c) Executive Compensation Plans and Arrangements:
Please refer to the description of Exhibits 10.1 through 10.12 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.
(d) Not applicable
18
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 26, 1999 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 26, 1999 By: /s/ M. ANTHONY BURNS
--------------------------
M. Anthony Burns
Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
Date: March 26, 1999 By: /s/ EDWIN A. HUSTON
---------------------------
Edwin A. Huston
Senior Executive Vice President -
Finance and Chief Financial Officer
(Principal Financial Officer)
Date: March 26, 1999 By: /s/ GEORGE P. SCANLON
----------------------------
George P. Scanlon
Senior Vice President - Planning
and Controller
(Principal Accounting Officer)
19
Date: March 26, 1999 By: /s/ JOSEPH L. DIONNE *
------------------------------
Joseph L. Dionne
Director
Date: March 26, 1999 By: /s/ EDWARD T. FOOTE II *
------------------------------
Edward T. Foote II
Director
Date: March 26, 1999 By: /s/ DAVID I. FUENTE *
------------------------------
David I. Fuente
Director
Date: March 26, 1999 By: /s/ JOHN A. GEORGES *
------------------------------
John A. Georges
Director
Date: March 26, 1999 By: /s/ VERNON E. JORDAN, JR. *
-------------------------------
Vernon E. Jordan, Jr.
Director
Date: March 26, 1999 By: /s/ DAVID T. KEARNS *
------------------------------
David T. Kearns
Director
Date: March 26, 1999 By: /s/ LYNN M. MARTIN *
------------------------------
Lynn M. Martin
Director
Date: March 26, 1999 By: /s/ PAUL J. RIZZO *
-----------------------------
Paul J. Rizzo
Director
Date: March 26, 1999 By: /s/ CHRISTINE A. VARNEY *
-----------------------------
Christine A. Varney
Director
Date: March 26, 1999 By: /s/ ALVA O. WAY *
-----------------------------
Alva O. Way
Director
*By: /s/ DIANA H. HULL
-----------------------------
Diana H. Hull
Attorney-in-Fact
20
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER DESCRIPTION
- -------- ------------
10.3(b) The Ryder System, Inc. 1999 Incentive Compensation Plan for
Headquarters Executive Management Levels MS 11 and Higher.
10.9(b) The form of Ryder System, Inc. Non-Qualified Stock Option
Agreement, dated as of February 17, 1998.
13.1 Portions of the Ryder System, Inc. 1998 Annual Report to
Shareholders. Those portions of the Ryder System, Inc. 1998
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
David I. Fuente
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.