RYDER SYSTEM INC — Annual Report 2008

May 22, 2008

11-K 1 g13555e11vk.htm RYDER SYSTEM, INC. Ryder System, Inc. PAGEBREAK

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 11-K

(Mark One)

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

For the fiscal year ended December 31, 2007.

OR

o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

Folio /Folio

PAGEBREAK

REQUIRED INFORMATION

TOC

FINANCIAL STATEMENTS — ·	Report of Independent Registered Certified Public Accounting Firm — PricewaterhouseCoopers LLP	2
·	Report of Independent Registered Certified Public Accounting Firm — KPMG LLP	3
·	Statements of Financial Condition December 31, 2007 and 2006	4
·	Statements of Changes in Plan Equity for each of the years ended December 31, 2007, 2006 and 2005	5
·	Notes to Financial Statements	6
·	Signatures	12
EXHIBITS
·	Exhibit Index	13
·	Consent of Independent Registered Certified Public Accounting Firm — PricewaterhouseCoopers LLP	14
·	Consent of Independent Registered Certified Public Accounting Firm — KPMG LLP	15
Ex-23.1 Consent of PricewaterhouseCoopers LLP
Ex-23.2 Consent of KPMG LLP

/TOC

TOC

Folio /Folio

PAGEBREAK

Table of Contents

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Participants and Administrator of Ryder System, Inc. Deferred Compensation Plan

In our opinion, the accompanying statements of financial condition and the related statements of changes in plan equity present fairly, in all material respects, the financial condition of the Ryder System, Inc. Deferred Compensation Plan (the “Plan”) at December 31, 2007 and 2006, and the changes in plan equity for the years then ended in conformity with accounting principles generally accepted in the United States of America. 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 of these statements 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 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Miami, Florida May 22, 2008

Folio 2 /Folio

PAGEBREAK

Table of Contents

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Participants and Administrator of Ryder System, Inc. Deferred Compensation Plan

We have audited the accompanying statement of changes in plan equity of Ryder System, Inc. Deferred Compensation Plan (the Plan), for the year ended December 31, 2005. This financial statement is the responsibility of the Plan’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit 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 reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the changes in plan equity for the year ended December 31, 2005 in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP June 15, 2006 Miami, Florida Certified Public Accountants

Folio 3 /Folio

PAGEBREAK

Table of Contents

RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN STATEMENTS OF FINANCIAL CONDITION

	December 31 — 2007	2006
Assets
Receivable from Ryder System, Inc.	$ 25,210,019	$ 23,421,167
Total assets	$ 25,210,019	$ 23,421,167
Liabilities and Plan Equity
Plan equity	$ 25,210,019	$ 23,421,167
Total liabilities and plan equity	$ 25,210,019	$ 23,421,167

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

Folio 4 /Folio

PAGEBREAK

Table of Contents

RYDER SYSTEM, INC. DEFERRED COMPENSATION PLAN STATEMENTS OF CHANGES IN PLAN EQUITY

	Years ended December 31 — 2007	2006	2005
Additions to plan equity attributed to:
Investment income from notional investments:
Net appreciation in value	$ 431,637	$ 1,678,636	$ 527,352
Dividends	1,163,463	1,090,818	646,285
Net investment income	1,595,100	2,769,454	1,173,637
Contributions to notional investments:
Participant	2,432,264	2,085,274	2,727,834
Total contributions	2,432,264	2,085,274	2,727,834
Total additions	4,027,364	4,854,728	3,901,471
Deductions from plan equity:
Distributions	2,238,512	2,664,107	3,930,312
Net increase (decrease) in plan equity	1,788,852	2,190,621	(28,841	)
Plan equity at beginning of period	23,421,167	21,230,546	21,259,387
Plan equity at end of period	$ 25,210,019	$ 23,421,167	$ 21,230,546

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

Folio 5 /Folio

PAGEBREAK

Table of Contents

| 1. |
| --- |
| The following description of the Ryder System, Inc. Deferred Compensation Plan (the Plan)
provides only general information. Participants should refer to the Plan document for a more
comprehensive description of the Plan’s provisions. |
| General. The Plan was adopted effective January 1, 1997. The Plan is unfunded and is intended
to be exempt from the participation, vesting, funding, and fiduciary requirements of Title I of
the Employee Retirement Income Security Act of 1974, as amended (ERISA), but is subject to
certain reporting and disclosure requirements under ERISA. Further, benefits under the Plan
are not guaranteed under Title IV of ERISA. The right of 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.’s Vice President of Compensation and Benefits. 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 the Company’s Retirement Committee to be eligible to participate in
the plan 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. With respect to any compensation deemed to be
“performance-based” under Section 409(a) of the Code, such election must be made no later than
six months before the end of the performance cycle. 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. The investment options offered by the
Plan include a total of sixteen notional investments. Participants may transfer their
contributions among funds on a daily basis. The Company may, but is not required to make
Company contributions into the Participant’s accounts. In 2007 and 2006, the Company did not make any
Company Contributions. |

Folio 6 /Folio

PAGEBREAK

Table of Contents

| | 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.
Forfeited balances of terminated participants’ non-vested accounts can be used to reduce future
Company contributions. At December 31, 2007 forfeited non-vested accounts available to reduce
future employer contributions totaled $33,340. 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. Participants will become fully vested in
Company contributions and the earnings attributable to such contributions when they reach age
65, become permanently disabled or upon death while employed by the Company. |
| | 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. |
| | All distributions from the Plan are 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. The distribution upon retirement shall be made in accordance with the participant’s
most recent election, which is effective at least one year prior to the date of retirement. If
the participant is a key employee, as defined in Section 416(i) of the tax code, at the time of
an event of separation of employment or retirement, the lump sum payment may not be made
earlier than the January following 6 months from the date of such event of separation of
employment or 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 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 U.S. generally
accepted accounting principles requires the plan administrator to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying
notes. Such estimates and assumptions are subject to inherent uncertainties, which may result
in actual amounts differing from reported amounts. |

Folio 7 /Folio

PAGEBREAK

Table of Contents

| | Receivable from Company. The Plan’s sole investment is 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 the Company 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 the
Company. Investment securities are exposed to various risks, such as interest rate, market and
credit risk. 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 Statements of Financial
Condition and the Statements of Changes in Plan Equity. |
| 3. | Notional Plan Investment Funds |
| | Notional Investment Fund A (“Fund A”) — Fund A is primarily invested in Ryder System, Inc.
common stock, which is traded on the New York Stock Exchange under the ticker symbol “R” and is
valued at its quoted market price. A small portion of Fund A is invested in short-term money
market investments. The money market portion of Fund A provides liquidity, which enables Plan
participants to transfer money daily among all investment choices. Dividends are automatically
reinvested in the common stock of the Company. Ownership is measured in units of Fund A
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 securities and repurchase
agreements for those securities. Fund B may also enter into reverse purchase agreements. |
| | Notional Investment Fund C (“Fund C”) — Fund C, the Fidelity Equity-Income Fund, normally
invests at least 80% of its assets in income-producing equity securities, mainly large cap
stocks, but may invest in other types of equity and debt securities. Fund C may invest in
securities of domestic and foreign issuers. |
| | Notional Investment Fund E (“Fund E”) — Fund E, the Fidelity Contrafund, invests primarily in
common stock of domestic and foreign issuers. Fund E 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,
primarily invests in common stock of foreign issuers. Fund F 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, primarily
invests at least 80% of its assets in bonds included in the Lehman Brothers Aggregate Bond
Index. |

Folio 8 /Folio

PAGEBREAK

Table of Contents

| Notional Investment Fund K (“Fund K”) — Fund K, the Spartan U.S. Equity Index Fund, normally
invests at least 80% of its assets in the 500 companies that make up the Standard & Poor’s 500
Index. Fund K seeks to provide investment results that correspond to the total return
performance of common stocks publicly traded in the U.S. |
| --- |
| Notional Investment Fund M (“Fund M”) — Fund M, the Fidelity Growth Company Fund, invests
primarily in common stocks of domestic and foreign issuers. Fund M invests in companies with
earnings or gross sales that indicate the potential for above-average growth. |
| Notional Investment Fund N (“Fund N”) — Fund N, the UAM: Rice Hall, James Cap Portfolio, invests
in common stocks of smaller, less established companies in terms of revenues, assets, and
market capitalization. Fund N may also invest in foreign securities. |
| Notional Investment Fund O (“Fund O”) — Fund O, the Fidelity Freedom Income Fund, seeks to
provide high current income and, as a secondary objective, some capital appreciation for those
already in retirement. Fund O normally invests 20% in Fidelity domestic equity funds, 40% in
Fidelity short-term mutual funds, and 35% in Fidelity investment-grade fixed-income funds and
5% in Fidelity high yield fixed-income funds. |
| Notional Investment Fund P (“Fund P”) — Fund P, the Fidelity Freedom Income 2010 Fund, seeks to
provide high total returns for those planning to retire around 2010. Fund P normally invests
40% in domestic equity funds, 10% in international equity funds, 35% in investment-grade
fixed-income funds, 5% in high yield fixed-income funds and 10% in Fidelity short-term mutual
funds. |
| Notional Investment Fund Q (“Fund Q”) — Fund Q, the Fidelity Freedom Income 2020 Fund, seeks to
provide high total returns for those planning to retire around 2020. Fund Q normally invests
54% in domestic equity funds, 13% in international equity funds, 25% in investment-grade
fixed-income funds, 7% in high yield fixed-income funds and 1% in Fidelity short-term mutual
funds. The mix of underlying Fidelity mutual funds will gradually become more conservative
over time. |
| Notional Investment Fund R (“Fund R”) — Fund R, the Fidelity Freedom Income 2030 Fund, seeks to
provide high total returns for those planning to retire around 2030. Fund R normally invests
65% in domestic equity funds, 16% in international equity funds, 11% in investment grade
fixed-income funds and 8% in high yield fixed-income funds. The mix of underlying Fidelity
mutual funds will gradually become more conservative over time. |
| Notional Investment Fund S (“Fund S”) — Fund S, the Fidelity Freedom 2040 Fund, seeks to provide
high total returns for those planning to retire in and around 2040. Fund S normally invests
68% in domestic equity funds, 17% in international equity funds, 5% in investment-grade
fixed-income funds and 10% in high yield fixed-income funds. The mix of underlying Fidelity
mutual funds will gradually become more conservative over time. |
| Notional Investment Fund T (“Fund T”) — Fund T, the Laudus Rosenberg U.S. Discovery Fund, seeks
to provide a return greater than the Russell 2500 Index. Fund T normally invests in common
stocks of small and mid-sized capitalization companies that are traded principally in the
markets of the United States. |

Folio 9 /Folio

PAGEBREAK

Table of Contents

| Notional Investment Fund U (“Fund U”) — Fund U, the Spartan Extended Market Index Fund, seeks to
provide investment results that correspond to the total returns of stocks for small to
mid capitalization U.S. companies. Fund U normally invests at least 80% of its assets in
common stocks in the Dow Jones Wilshire 4500 Completion Index, which represents the performance
of stocks of small to mid-capitalization U.S. companies. |
| --- |
| The number of participants’ accounts in each of the funds at December 31, 2007 and 2006 was as
follows: |

Fund A	96	113
Fund B	65	69
Fund C	95	96
Fund E	100	106
Fund F	107	108
Fund J	57	58
Fund K	72	71
Fund M	111	122
Fund N	53	58
Fund O	8	6
Fund P	32	36
Fund Q	31	29
Fund R	27	21
Fund S	9	9
Fund T	24	21
Fund U	21	17

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, no additional contributions to the Plan will
be permitted after the effective date of the termination of the Plan, however the retirement
committee shall continue to credit gains and losses to the participant’s account until the
account balance has been fully distributed. After the effective date of the Plan termination,
distributions will continue to be made in accordance with the Plan provisions, including the
limitations relating to distributions to key employees, as defined in the Plan.
5.	Tax Status of the Plan
	The Plan is not subject to federal income tax. It is operated as a nonqualified deferred
compensation arrangement that effectively defers compensation for individual participants.
	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 tax 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. However, 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.

Folio 10 /Folio

PAGEBREAK

Table of Contents

| | 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 when they become vested. |
| --- | --- |
| 6. | Plan Fees and Expenses |
| | Although 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. The Company has paid $10,000 for each of the years ended December 31, 2007, 2006 and
2005 for the administration of the Plan. |
| 7. | Plan Amendment |
| | Effective December 31, 2007, the Plan was amended to provide for Company contributions on
a participant’s eligible pay in excess of the applicable IRS limits of a 401(k) plan. Employees
eligible to participate in the enhanced component of the Ryder System, Inc. 401(k) Savings Plan
will also participate in a newly enhanced Deferred Compensation Plan provided they meet
eligibility requirements of the Plan. Eligible employees will receive (a) Company contributions
equal to 3% of excess eligible pay, even if participants do not make contributions to the Plan
and (b) a 50% match of participant contributions of up to 5% of excess eligible pay. |

Folio 11 /Folio

PAGEBREAK

Table of Contents

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.

/s/ Charles R. Patton
Charles R. Patton
Vice President Compensation and Benefits, Plan Administrator

Folio 12 /Folio

PAGEBREAK

Table of Contents

EXHIBIT INDEX

EXHIBIT	DESCRIPTION
23.1	Consent of Independent Registered Certified Public Accounting Firm — PricewaterhouseCoopers LLP
23.2	Consent of Independent Registered Certified Public Accounting Firm — KPMG LLP

Folio 13 /Folio