RYDER SYSTEM INC — Annual Report 2005

May 27, 2005

11-K 1 g95561e11vk.htm RYDER SYSTEM INC. Ryder System Inc. PAGEBREAK

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

(Mark one)

þ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004.

OR

o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to .

Commission file number # 1-4364

RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN

Ryder System, Inc.

11690 NW 105 Street Miami, Fl. 33178

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REQUIRED INFORMATION

FINANCIAL STATEMENTS		PAGE NO.
§	Report of Independent Registered Public Accounting Firm	2
§	Statements of Financial Position December 31, 2004 and 2003	3
§	Statements of Income and Changes in Plan Equity
for each of the years ended December 31, 2004, 2003 and 2002	4
§	Notes to Financial Statements	5
EXHIBITS
§	Exhibit Index	11
§	Consent of Independent Registered Public Accounting Firm	12
Consent of KPMG LLP

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Ryder System, Inc. Retirement Committee has duly caused this annual report to be signed by the undersigned hereunto duly authorized.

RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN — By:
Jennifer Thomas
Senior Vice President and Chief Human Resources
Officer, Plan Administrator

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REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Participants and Administrator

Ryder System, Inc. Deferred Compensation Plan:

We have audited the accompanying statements of financial position of the Ryder System, Inc. Deferred Compensation Plan (the Plan), as of December 31, 2004 and 2003, and the statements of income and changes in plan equity for the years ended December 31, 2004, 2003, and 2002. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain a reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Plan as of December 31, 2004 and 2003, and the changes in plan equity for the years ended December 31, 2004, 2003, and 2002 in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Miami, Florida April 25, 2005

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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN

STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2004 AND 2003

	2004	2003
Assets
Receivable from Ryder System, Inc.	$ 21,259,387	$ 19,655,990
Total assets	$ 21,259,387	$ 19,655,990
Liabilities and Plan Equity
Plan equity	$ 21,259,387	$ 19,655,990
Total liabilities and plan equity	$ 21,259,387	$ 19,655,990

The accompanying notes are an integral part of these financial statements.

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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN

STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY FOR EACH OF THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

	2004	2003	2002
Additions to plan equity attributed to:
Investment income (loss) from notional investments:
Net appreciation (depreciation) in value	$ 1,983,152	$ 3,423,657	$ (1,851,233	)
Dividends	449,201	316,755	240,384
Net investment income (loss)	2,432,353	3,740,412	(1,610,849	)
Contributions to notional investments:
Employer	—	85,643	82,201
Participant	1,729,224	1,965,273	2,514,102
Total contributions	1,729,224	2,050,916	2,596,303
Total additions	4,161,577	5,791,328	985,454
Deductions from plan equity:
Distributions	2,558,180	894,380	2,378,683
Net increase (decrease) in plan equity	1,603,397	4,896,948	(1,393,229	)
Plan equity at beginning of period	19,655,990	14,759,042	16,152,271
Plan equity at end of period	$ 21,259,387	$ 19,655,990	$ 14,759,042

The accompanying notes are an integral part of these financial statements.

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RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN

NOTES TO FINANCIAL STATEMENTS

| 1. |
| --- |
| The following description of Ryder System, Inc. Deferred Compensation Plan (the Plan) provides
only general information. Participants should refer to the Plan document for a more
comprehensive description of the Plan’s provisions. |
| General. The Plan was adopted effective January 1, 1997. The Plan is unfunded and is intended
to be exempt from the participation, vesting, funding, and fiduciary requirements of Title I of
the Employee Retirement Income Security Act of 1974, as amended (ERISA), but is subject to
certain reporting and disclosure requirements under ERISA. Further, benefits under the Plan
are not guaranteed under Title IV of ERISA. The right of participants or their designated
beneficiary to receive a distribution under the Plan will be an unsecured claim against the
general assets of Ryder System, Inc. (the Company), and neither the participant nor a
designated beneficiary will have any rights in or against any specific assets of the Company. |
| The Company maintains assets in a grantor trust (the Trust) solely for the benefit of the Plan
participants, which may be used to pay all or a portion of the obligations of the Plan. The
Trust provides greater assurance that future benefits under the Plan will be paid in the event
that a change of control should occur or under other circumstances. However, the right of a
participant or his designated beneficiary to receive a distribution under the Plan will be an
unsecured claim against the Trust and the general assets of the Company in the event of
bankruptcy, and neither the Plan, participant, nor a designated beneficiary will have any
rights in or against any specific assets of the Trust or the Company. |
| The Plan Administrator is Ryder System, Inc. Retirement Committee comprised of ten persons
appointed by Ryder System, Inc.’s Board of Directors (Board of Directors). The Plan’s trustee
and recordkeeper is Fidelity Management Trust Co. |
| Eligibility. Participation in the Plan is voluntary. To participate in the Plan, an employee
must (i) be designated by a committee appointed by the Board of Directors and (ii) be part of a
select group of management or highly compensated employees within the meaning of Sections
201(2), 301(a)(3) and 401 (a)(1) of ERISA. Members of the Board of Directors are eligible for
participation in the Plan. |
| Contributions. Compensation deferral agreements are effective on a Plan year basis, and must be
filed before the beginning of a Plan year. Participants may defer up to 100% of compensation
less the amount of Ryder System, Inc. 401(k) Savings Plan (Savings Plan) tax-deferred
contributions. Income taxes are deferred on participants’ salary reductions and the deferred
salary amounts are assumed to be invested (“notional investments”) in accordance with
investment options selected by each participant. Beginning December 1, 2004 the investment
options offered by the Plan have been expanded from fifteen to a total of seventeen notional
investments. Participants may transfer their contributions among funds on a daily basis.
Effective October 1, 2002 any Company contributions are invested in the investment funds in the
same allocation percentages as each participant’s deferred contributions. Prior to October 1,
2002 the Company contributions were automatically allocated on a notional basis to the Ryder
System, Inc. Common Stock Fund. |

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| Effective January 1, 2004, the Company will no longer make Company contributions to the Plan.
Prior to January 1, 2004, the Company matched 50% of employee contributions up to 4% of
compensation (6% if the Company met its Economic Value Added or EVA goal or a pro-rata portion
of the EVA match based on the portion of EVA goal attained), offset by any company match
recorded during the plan year in the Savings Plan. Plan contributions and match are not tied to
participation in the Savings Plan. |
| --- |
| Participant Accounts. Each participant’s account is credited with the participant’s
contribution and allocation of appreciation/(depreciation) which is indexed to the market
performance of the participants’ elections among the notional investment funds made available
under the Plan less administrative expenses, if any. Allocations are based on participant
earnings or account balance. Appreciation/(depreciation) is allocated daily based on units of
notional investment. Prior to January 1, 2004 participant accounts were also credited with an
allocation of the Company’s contribution. Forfeited balances of terminated participants’
non-vested accounts are used to reduce future Company contributions. At December 31, 2004,
forfeited non-vested accounts available to reduce future employer contributions totaled
$26,232. The benefit to which a participant is entitled is the benefit that can be provided
from the participant’s vested account. |
| Vesting. Participants are immediately vested in their contributions and any appreciation
thereon. Upon completion of two years of service, participants vest 25% in the Company
contributions and the appreciation attributable to such contributions and 25% upon completion
of each year thereafter until they are fully vested. At retirement age, (the earlier of age 65
or the date in which a participant has both attained age 55 and completed at least 10 years of
service), a participant becomes fully vested in the Company contributions and the appreciation
attributable to such contributions. |
| Distributions. A participant may request a distribution of all or a portion of his elective
contribution account balance if he can demonstrate financial hardship. The Plan Administrator
must approve the request and the amount withdrawn cannot be subsequently repaid to the Trust.
Such amounts will be considered distributions to the participant for tax purposes. At anytime,
participants may elect to withdraw all of the vested portion of their account less a withdrawal
penalty of 10% of such amount. Once the participant has received their withdrawal, the
participant may participate on any January 1 following the withdrawal. Once the participant
has received their second withdrawal, their participation in the Plan will terminate and the
participant will not be eligible to participate in the Plan in the future. |
| Effective January 1, 2003, all distributions from the Plan will be made in a lump sum during
the month of January following disability, death or other termination of employment, each an
event of separation of employment, or a participant can elect a fixed date distribution to
occur in July of the year selected for distribution. In the event of retirement, a participant
may elect to receive either (a) a lump sum during the January immediately following
retirement, or (b) a minimum of two, and a maximum of 15 annual installments beginning in the
January immediately following retirement. Prior to January 1, 2003, each participant of the
Plan could elect a method of receipt of distributions from the Plan upon retirement,
disability, death or other termination of employment, each an event of separation of employment
or a participant can elect a fixed date distribution. Such election indicated that the
participant has chosen to receive either: (a) a lump sum during the January immediately
following the earliest triggering event of the participant’s separation from employment, or (b)
a minimum of two, and a maximum of 15 annual installments beginning in the January immediately |

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| | following the earliest triggering event of the participant’s separation from employment, or as
soon as administratively practicable thereafter. |
| --- | --- |
| 2. | Summary of Significant Accounting Policies |
| | Basis of Accounting. The financial statements of the Plan are prepared on the accrual basis of
accounting. |
| | Use of Estimates. The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to make estimates and
assumptions that affect reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those
estimates. |
| | Receivable from Company. The Plan records a receivable from the Company equal to the notional
amount of the participants’ accounts including Company matches. Purchases and sales of
notional investments are recorded on a trade-date basis. Dividends on notional investments in
Company common stock and mutual funds are recorded on the record date. Interest income on
notional investments is recorded on the accrual basis. |
| | Payment of Benefits . Benefits are recorded when paid. |
| | Risk and Uncertainties. The amount of the Plan’s receivable from Ryder System, Inc. is based
on, among other things, the performance of the notional investments which consist of stocks,
bonds, fixed income securities, and other investment securities and the financial viability of
Ryder System, Inc. Investment securities are exposed to various risks, such as interest rate,
market and credit. Due to the level of risk associated with certain investment securities and
the level of uncertainty related to changes in the value of investment securities, it is at
least reasonably possible that changes in risks in the near term would materially affect
participants’ account balances and the amounts reported in the statement of position and the
statement of income and changes in plan equity. |
| 3. | Notional Plan Investment Funds |
| | Notional Investment Fund A (“Fund A”) - Fund A is invested in Ryder System, Inc. common
stock, which is purchased on a regular and continuous basis. Dividends are automatically
reinvested in the common stock. Ownership is measured in units of the fund instead of shares
of stock. |
| | Notional Investment Fund B (“Fund B”) - Fund B, the Fidelity Retirement Money Market
Portfolio, invests in high quality U.S. dollar-denominated money market instruments of U.S.
and foreign issuers. |
| | Notional Investment Fund C (“Fund C”) - Fund C, the Fidelity Equity-Income Fund, normally
invests in income-producing equity securities, mainly large cap stocks, but may invest in
other types of equity and debt securities. The fund may invest in securities of domestic and
foreign issuers. |
| | Notional Investment Fund D (“Fund D”) - Fund D, the Putnam Voyager Fund A, invests primarily
in common stocks of both well-known, established companies, as well as smaller, |

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| less well-known companies. Investments are diversified across many different types of
companies and industries. The fund may also invest in bonds. |
| --- |
| Notional Investment Fund E (“Fund E”) - Fund E, the Fidelity Contrafund, invests primarily in
common stock of domestic and foreign issuers. The fund may invest in securities of companies
that are selling below book value. |
| Notional Investment Fund F (“Fund F”) - Fund F, the Fidelity Diversified International Fund,
normally invests at least 65% of total assets in foreign securities. The fund may be invested
in all types of securities, including stocks and debt securities of companies and governments
of all nations. |
| Notional Investment Fund J (“Fund J”) – Fund J, the Fidelity U.S. Bond Index Fund, purchases
investment-grade securities with maturities of at least one year including U.S. Treasury and
U.S. or government securities, corporate bonds, asset-backed and mortgage-backed securities,
and U.S. dollar denominated foreign securities. |
| Notional Investment Fund K (“Fund K”) – Fund K, the Spartan U.S. Equity Index Fund, invests in
the 500 companies that make up the Standard & Poor’s 500 Index and in other securities that
are based on the value of the index. The fund’s manager focuses on duplicating the
composition and performance of a specific market index as opposed to a strategy of selecting
attractive stocks. |
| Notional Investment Fund L (“Fund L”) – Fund L, the Fidelity Aggressive Growth Fund, focuses
on investment in stocks of medium-sized companies, but may invest substantially in larger or
smaller companies. The fund invests in companies that are believed to offer the potential for
accelerated earnings or revenue growth. Effective April 30, 2002 new contributions and
transfers into the Fidelity Aggressive Growth Fund were no longer allowed. Any new
contributions directed into this fund were invested in the Fidelity Growth Company Fund.
Effective December 31, 2004, any holdings remaining in the Fidelity Aggressive Growth Fund
were automatically transferred to the Fidelity Growth Company Fund. |
| Notional Investment Fund M (“Fund M”) – Fund M, the Fidelity Growth Company Fund, this fund
invests primarily in common stocks of domestic and foreign issuers. The fund invests in
companies with earnings or gross sales that indicate the potential for above-average growth. |
| Notional Investment Fund (“Fund N”) – Fund N, the UAM: Rice Hall, James Cap Portfolio, this
fund invests in common stocks of smaller, less established companies in terms of revenues,
assets, and market capitalization. The portfolio may also invest in foreign securities. |
| Notional Investment Fund (“Fund O”) – Fund O, the Fidelity Freedom Income Fund, this fund
seeks to provide high current income and, as a secondary objective, some capital appreciation
for those already in retirement. The fund invests 20% in Fidelity mutual funds, 40% in
Fidelity bond mutual funds, and 40% in Fidelity money market mutual funds. |
| Notional Investment Fund (“Fund P”) – Fund P, the Fidelity Freedom Income 2010 Fund, this fund
seeks to provide high total returns for those planning to retire in and around 2010. |

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| The fund invests 47% in Fidelity stock mutual funds, 44% in Fidelity bond mutual funds, and 9%
in Fidelity money market mutual funds. |
| --- |
| Notional Investment Fund (“Fund Q”) – Fund Q, the Fidelity Freedom Income 2020 Fund, this fund
seeks to provide high total returns for those planning to retire in and around 2020. The fund
invests 71% in Fidelity stock mutual funds and 29% in Fidelity bond mutual funds. |
| Notional Investment Fund (“Fund R”) – Fund R, the Fidelity Freedom Income 2030 Fund, this fund
seeks to provide high total returns for those planning to retire in and around 2030. The fund
invests 83% in Fidelity stock mutual funds and 17% in Fidelity bond mutual funds. |
| Notional Investment Fund (“Fund S”) – Fund S, the Fidelity Freedom 2040 Fund, this fund seeks
to provide high total returns for those planning to retire in and around 2040. The fund
invests 90% in Fidelity stock mutual funds and 10% in Fidelity bond mutual funds. |
| Notional Investment Fund (“Fund T”) – Fund T, the Laudus Rosenberg US Discovery Fund, was added
as an investment option in the Plan effective December 1, 2004. This fund seeks to provide a
return greater than the Russell 2500 Index. The fund invests in common stocks of small and
mid-sized capitalization companies that are traded principally in the markets of the United
States. |
| Notional Investment Fund (“Fund U”) – Fund U, the Spartan Extended Market Index Fund, was added
as an investment option in the Plan effective December 1, 2004. This fund seeks to provide
investment results that correspond to the total returns of stocks for small to mid
capitalization U.S. companies. The fund invests a minimum of 80% in common stocks in the
Wilshire 4500 Completion Index. |
| The number of participants’ accounts in each of the funds at December 31, 2004 and 2003 is as
follows: |

Fund A	158	184
Fund B	72	76
Fund C	91	99
Fund D	85	102
Fund E	108	116
Fund F	84	81
Fund J	73	78
Fund K	78	78
Fund L	0	93
Fund M	123	112
Fund N	51	29
Fund O	9	8
Fund P	30	31
Fund Q	30	35
Fund R	19	18
Fund S	6	5
Fund T	4	0
Fund U	2	0

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4.	Plan Termination
	While it has not expressed any intention to do so, the Company may amend or terminate the Plan
at any time. In the event the Plan is terminated, distribution of amounts in the participant’s
account shall be made to the participant on January 1st immediately following a participant’s
separation from employment. Payment will be made in accordance with the participant’s most
recent participant election and enrollment form which is effective at least one year prior to
the date of separation of employment. No additional credits of contributions shall be made to
the participant’s account for periods after termination of the Plan, but the Retirement
Committee shall continue to credit gains and losses to the participant’s account, until the
balance has been fully distributed.
5.	Tax Status of the Plan
	A participant generally will not be taxed on the tax-deferred contributions or the Company
contributions to the Plan, or earnings thereon, allocable to his participant’s account until
such amounts are distributed to the participant or his beneficiary under the Plan. The value
of the participant’s account, including any earnings, is deductible by the Company for federal
tax purposes in the year in which those amounts become taxable to the participant or his
beneficiary.
	Participants or their beneficiaries generally will be taxed, at ordinary income rates, on the
amount they receive as a distribution from the Plan at the time they receive the distribution.
Since the Plan is not qualified under Section 401(a) of the Code, distributions from the Plan
will not qualify for any of the favorable tax rulings applicable to qualified tax
distributions, such as tax-deferred rollovers or five year averaging. On the other hand,
distributions from the Plan will not be subject to various excise taxes applicable to qualified
plan distributions, such as 10% excise tax on distribution prior to age 59 1/2, or the 15%
excise tax on excess benefit payments.
	An employee’s tax-deferred contributions to the Plan are subject to federal social security and
medicare taxes and federal unemployment taxes when earned, and Company contributions, and any
earnings thereon prior to the time such amounts become vested, are subject to those taxes as
and when they become vested.
6.	Plan Fees and Expenses
	Although all expenses of administration relating to the Plan may be charged against a
participant’s account, at the present time, the Company has elected to pay all administrative
and marketing expenses.

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EXHIBIT INDEX

EXHIBIT	DESCRIPTION
23.1	Consent of Independent Registered Public Accounting Firm

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