2. Safe Harbor
Certain statements and information included in this presentation are quot;forward-looking statementsquot; under the
Federal Private Securities Litigation Reform Act of 1995. Accordingly, these forward-looking statements should be
evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause
actual results and events to differ materially from those in the forward-looking statements. Important factors that
could cause such differences include, among others, our ability to obtain adequate profit margins for our services,
our inability to maintain current pricing levels due to customer acceptance or competition, customer retention
levels, unexpected volume declines, loss of key customers in the Supply Chain Solutions (SCS) business segment,
unexpected reserves or write-offs due to the deterioration of the credit worthiness or bankruptcy of customers,
changes in financial, tax or regulatory requirements or changes in customers’ business environments that will limit
their ability to commit to long-term vehicle leases, changes in economic and market conditions affecting the
commercial rental market or the sale of used vehicles, the effect of severe weather events, labor strikes or work
stoppages affecting our or our customers’ business operations, adequacy of accounting estimates, reserve and
accruals particularly with respect to pension, taxes, insurance and revenue, changes in general economic
conditions, sudden or unusual changes in fuel prices, availability of qualified drivers, our ability to manage our cost
structure, new accounting pronouncements, rules or interpretations, changes in government regulations including
regulations regarding vehicle emissions and the risks described in our filings with the Securities and Exchange
Commission. The risks included here are not exhaustive. New risks emerge from time to time and it is not possible
for management to predict all such risk factors or to assess the impact of such risks on our business. Accordingly,
we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
2
4. 4th Quarter Results Overview
► Earnings per diluted share were $1.24 versus $1.08 in 4Q06
– 4Q07 included a $0.06 benefit related primarily to Canada tax law changes
► Comparable earnings per diluted share were $1.18, up 9% from $1.08 in 4Q06
► Total revenue up 5% (and operating revenue up 4%) as a result of contractual revenue growth in
all segments as well as favorable foreign exchange rate movements
► Fleet Management Solutions (FMS) total revenue up 8% (and operating revenue up 3%) vs. prior
year
– Contractual revenue increased 7%
• Full service lease revenue grew 7% and contract maintenance revenue grew 10%
– Commercial rental revenue down 7%
– Fuel revenue grew 21%
– Foreign exchange impact accounts for 2 percentage points of total revenue growth of 8%
► FMS net before tax earnings (NBT) up 8%
– FMS NBT percent of operating revenue up 60 basis points to 13.4%
► FMS earnings benefited from improved contractual business performance, and lower expenses
for pension, safety and insurance, sales/marketing and depreciation policy changes.
Improvements were partially offset by lower commercial rental and used vehicle sales results.
4
5. 4th Quarter Results Overview (cont’d)
► Supply Chain Solutions (SCS) total revenue up 1% (and operating revenue up 5%) vs.
prior year, reflecting foreign exchange impact and new/expanded business, partially
offset by net reporting of customer business previously presented on a gross basis, a
previously disclosed automotive plant closure in 2Q07, and reduced activity with certain
high-tech customers
► SCS net before tax earnings (NBT) up 11%
– SCS NBT percent of operating revenue up 30 basis points to 5.6%
► SCS earnings positively impacted by improved international results, lower safety and
insurance costs and lower incentive-based compensation, partially offset by the impact
of reduced activity with certain high-tech customers
► Dedicated Contract Carriage (DCC) total revenue up 3% (and operating revenue
up 3%) vs. prior year due primarily to higher fuel cost pass-throughs
► DCC net before tax earnings (NBT) up 9%
– DCC NBT percent of operating revenue up 40 basis points to 8.7%
► DCC earnings positively impacted by improved operating performance
5
6. Key Financial Statistics
($ Millions, Except Per Share Amounts)
Fourth Quarter
2007 2006 % B/(W)
(1)(2)
Operating Revenue $ 1,189.6 $ 1,146.0 4%
Fuel Services and Subcontracted Transportation Revenue 476.6 448.1 6%
Total Revenue $ 1,666.2 $ 1,594.1 5%
Earnings Per Share $ 1.24 $ 1.08 15%
(1)
Comparable Earnings Per Share $ 1.18 $ 1.08 9%
Memo:
Average Shares (Millions) - Diluted 58.1 61.2
Tax Rate 35.6% 35.3%
(1)
Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. Comparable earnings per share exclude restructuring recoveries and tax law changes in 2007.
(2)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel services
revenue net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation as fuel is largely a
pass through to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is
excluded from the operating revenue computation as it is largely a pass through to customers and the Company realizes minimal changes in profitability as a result of fluctuations
in subcontracted transportation.
6
7. Key Financial Statistics
($ Millions, Except Per Share Amounts)
Full Year
2007 2006 % B/(W)
(1)(2)
Operating Revenue $ 4,636.6 $ 4,454.2 4%
Fuel Services and Subcontracted Transportation Revenue 1,929.4 1,852.4 4%
Total Revenue $ 6,566.0 $ 6,306.6 4%
Earnings Per Share $ 4.24 $ 4.04 5%
(1)
Comparable Earnings Per Share $ 4.21 $ 3.99 6%
Memo:
Average Shares (Millions) - Diluted 59.8 61.6
Tax Rate 37.4% 36.6%
(1)
Adjusted Return on Capital 7.4% 7.9%
(1)
Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. Comparable earnings per share exclude restructuring costs, property gain and fourth
quarter tax law changes in 2007 and tax law changes and pension charge in 2006.
(2)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel
services revenue net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation as
fuel is largely a pass through to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted
transportation revenue is excluded from the operating revenue computation as it is largely a pass through to customers and the Company realizes minimal changes in
profitability as a result of fluctuations in subcontracted transportation.
7
8. Business Segment
($ Millions)
Fourth Quarter
Mem o: Total Revenue
2007 2006 % B/(W) 2007 2006 % B/(W)
(1)
Operating Revenue :
Fleet Managem ent Solutions $ 764.8 $ 741.3 3% $ 1,085.4 $ 1,005.4 8%
Supply Chain Solutions 337.2 320.1 5% 545.8 543.1 1%
Dedicated Contract Carriage 140.3 135.6 3% 144.3 140.2 3%
Elim inations (52.7) (51.0) (3)% (109.3) (94.6) (16)%
Total $ 1,189.6 $ 1,146.0 4% $ 1,666.2 $ 1,594.1 5%
Segm ent Net Before Tax Earnings:
Fleet Managem ent Solutions $ 102.3 $ 94.5 8%
Supply Chain Solutions 18.9 17.0 11%
Dedicated Contract Carriage 12.3 11.2 9%
Elim inations (8.1) (9.0) 12%
125.4 113.7 10%
Central Support Services (Unallocated Share) (14.0) (11.1) (26)%
(1)
Earnings Before Restructuring and Incom e Taxes 111.4 102.6 9%
(2)
Restructuring and Other Recoveries/(Charges), Net and Other Item s 0.4 (0.8) NA
Earnings Before Incom e Taxes 111.8 101.8 10%
Provision for Incom e Taxes (39.9) (36.0) (11)%
Net Earnings $ 71.9 $ 65.8 9%
(1)
Com parable Net Earnings $ 68.3 $ 65.8 4%
Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. Comparable net earnings exclude restructuring recoveries and fourth quarter tax law
(1)
changes in 2007.
Our primary measure of segment financial performance excludes restructuring and other recoveries/(charges), net and other items including gain on sale of property in
(2)
2007 and pension accounting charge in 2006; however, the applicable portion of the restructuring and other recoveries/(charges), net and other items that related to each
segment was as follows: FMS – $0.3 and SCS – $0.1 in 2007; FMS – $0.2, SCS – ($0.9) and CSS – ($0.1) in 2006.
8
9. Business Segment
($ Millions)
Full Year
Mem o: Total Revenue
2007 2006 % B/(W) 2007 2006 % B/(W)
(1)
Operating Revenue :
Fleet Managem ent Solutions $ 2,979.4 $ 2,921.1 2% $ 4,162.6 $ 4,096.0 2%
Supply Chain Solutions 1,314.5 1,182.9 11% 2,250.3 2,028.5 11%
Dedicated Contract Carriage 552.9 548.9 1% 567.6 568.8 -
Elim inations (210.2) (198.7) (6)% (414.5) (386.7) (7)%
Total $ 4,636.6 $ 4,454.2 4% $ 6,566.0 $ 6,306.6 4%
Segm ent Net Before Tax Earnings:
Fleet Managem ent Solutions $ 373.7 $ 368.1 2%
Supply Chain Solutions 63.2 62.1 2%
Dedicated Contract Carriage 47.4 42.6 11%
Elim inations (31.2) (33.7) 7%
453.1 439.1 3%
Central Support Services (Unallocated Share) (44.4) (39.5) (13)%
(1)
Earnings Before Restructuring and Incom e Taxes 408.7 399.6 2%
(2)
Restructuring and Other Recoveries/(Charges), Net and Other Item s (3.2) (6.6) NA
Earnings Before Incom e Taxes 405.5 393.0 3%
Provision for Incom e Taxes (151.6) (144.0) (5)%
Net Earnings $ 253.9 $ 249.0 2%
(1)
Com parable Net Earnings $ 251.9 $ 245.9 2%
Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. Comparable net earnings exclude restructuring costs, property gain and fourth quarter tax law
(1)
changes in 2007 and tax law changes and pension charge in 2006.
Our primary measure of segment financial performance excludes restructuring and other recoveries/(charges), net and other items including gain on sale of property in 2007 and
(2)
pension accounting charge in 2006; however, the applicable portion of the restructuring and other recoveries/(charges), net and other items that related to each segment was as
follows: FMS – $4.5, SCS – ($5.6), DCC – ($1.1) and CSS – ($1.0) in 2007; and FMS – ($5.6), SCS – ($0.9) and CSS – ($0.1) in 2006.
9
10. Capital Expenditures
($ Millions)
Full Year
2007 $
2007 2006 O/(U) 2006
Full Service Lease $ 900 $ 1,493 $ (593)
Commercial Rental 219 195 24
Operating Property and Equipment 76 72 4
Gross Capital Expenditures 1,195 1,760 (565)
Less: Proceeds from Sales (Primarily Revenue Earning Equipment) 374 333 41
Less: Proceeds from Sale and Leaseback of Revenue Earning Equipment 150 - 150
Net Capital Expenditures $ 671 $ 1,427 $ (756)
Memo: Acquisitions $ 75 $ 4 $ 71
10
11. Cash Flow
($ Millions)
Full Year
2007 2006
Net Earnings $ 254 $ 249
Depreciation 816 743
Gains on Vehicle Sales, Net (44) (51)
Amortization and Other Non-Cash Charges, Net 15 28
Changes in Working Capital and Deferred Taxes 62 (115)
Cash Provided by Operating Activities 1,103 854
Proceeds from Sales (Primarily Revenue Earning Equipment) 374 333
Sale and Leaseback of Revenue Earning Equipment 150 -
Collections of Direct Finance Leases 63 66
Other, Net 2 2
(1)
Total Cash Generated 1,692 1,255
(2)
Capital Expenditures (1,317) (1,695)
(1)(3)
Free Cash Flow $ 375 $ (440)
(1) Non-GAAP financial measure; refer to Appendix – Non-GAAP Financial Measures
(2) Capitalexpenditures presented net of changes in accounts payable related to purchases of revenue earning equipment
(3) Free Cash Flow excludes acquisitions
11
12. Debt to Equity Ratio
($ Millions)
300% 275%
275%
234%
250%
(1)
Total Obligations to Equity
201%
200%
168% 157%
151% Balance Sheet Debt to Equity
146%
129%
150%
100%
50%
0%
12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 Long
Term
Target (2)
Midpoint
12/31/07 12/31/06
Balance Sheet Debt $ 2,776 $ 2,817
147% 164%
Percent To Equity
(1)
Total Obligations $ 2,954 $ 2,895
(1) 157% 168%
Percent To Equity
Total Equity $ 1,888 $ 1,721
Note: Includes impact of accumulated net pension related equity charge of $148 million as of 12/31/07 and $201 million as of 12/31/06.
(1) Non-GAAP financial measure. Total obligations include the present value of minimum lease payments and guaranteed residual values under operating leases of
$178 million at 12/31/07 and $78 million at 12/31/06.
(2) Represents long term total obligations to equity target of 250 - 300% while maintaining a strong investment grade rating.
12
14. (1)
Asset Management Update
► The number of used vehicles sold in the fourth quarter was 5,365, up 17% compared with
prior year
► Proceeds per unit for tractors and trucks were down 12% and 13%, respectively, in the
fourth quarter compared with prior year
– Excluding wholesaling type activity, retail pricing for tractors and trucks was down 3% and 1%,
respectively, from the prior year
► Units held for sale were 6,434 at quarter end; down 15% from 7,607 units held for sale at
the end of the third quarter
– Units held for sale were down 16% from 7,643 in the prior year
► Vehicles no longer earning revenue were 6,335 at quarter end; down 1,303 from the end of
the third quarter
– Vehicles no longer earning revenue were down 2,162 vs. prior year driven primarily by a lower
used truck center inventory
► Average total commercial rental fleet was down 12% year-over-year
(1) All information presented on this page only is for the U.S. fleet and excludes Canadian and U.K. operations.
14
16. 2008 Overall Environment
Baseline Assumptions Opportunities (+) / Risks (-)
− Broader economic decline
● Overall economy soft
without further weakening
Modest Inflation Moderate GDP Growth
+ Federal funds rates lowered
● Stable real interest rates
− U.S. dollar strengthening
● Strength and currency
(primarily impacts revenue)
stability in key foreign
markets
+ Stronger free cash flow if
● Positive free cash flow
economy slows
16
17. FMS Assumptions
Baseline Assumptions Opportunities (+) / Risks (-)
− Potential for softer freight demand
● Positive lease / contract
maintenance revenue momentum − Customer fleet downsizing
from organic sales and closed − Softening rental demand
acquisitions − Fewer miles driven
+ Additional acquisitions
● Retention and sales initiatives
− Declining used vehicle pricing
● Stable used vehicle pricing and
improving vehicle residual values
with lower inventory levels
● Ongoing maintenance cost
reduction initiatives
17
18. SCS / DCC Assumptions
Baseline Assumptions Opportunities (+) / Risks (-)
− Potential for current customer
● Stable volumes with existing
customers volume declines and plant closures
− Potential for softer freight demand
● Focus on customer retention and
business development and reduced new business
+ Geographic / industry vertical
● Grow new geographic markets
(i.e. China and others) expansion above baseline
+ Acquisitions
● Increase penetration of consumer
goods vertical segment
● Technology investments to enhance
product offerings and reduce back
office costs
18
19. Key Financial Statistics
($ Millions, Except Per Share Amounts)
2008
Forecast 2007 % B / (W)
Revenue:
Operating (1) (2) $ 4,770 - 4,930 $ 4,637 3 - 6%
(3)
Fuel Services and Subcontracted Transportation 1,310 - 1,350 1,929 (30 - 32)%
Total Revenue (3) $ 6,080 - 6,280 $ 6,566 (4 - 7)%
Earnings:
Earnings Before Income Taxes $ 418 - 432 $ 405 3 - 7%
Earnings $ 255 - 263 $ 254 0 - 4%
Comparable Earnings (1) $ 255 - 263 $ 252 1 - 4%
Earnings Per Share (EPS):
EPS $ 4.50 - 4.65 $ 4.24 6 - 10%
(1)
Comparable EPS $ 4.50 - 4.65 $ 4.21 7 - 10%
Memo: Average Shares (Millions) - Diluted 56.6 59.8
Tax Rate 39.1% 37.4%
Adjusted Return on Capital (1) 7.6% 7.4%
Non-GAAP financial measure; refer to Appendix – Non-GAAP Financial Measures. Comparable earnings and comparable EPS exclude restructuring costs, property gain,
(1)
and fourth quarter tax law changes in 2007.
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel
(2)
services revenue net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation
as fuel is largely a pass through to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted
transportation revenue is excluded from the operating revenue computation as prior to 2008 it was largely a pass through to customers and the Company realized minimal
changes in profitability as a result of fluctuations in subcontracted transportation.
Includes impact of net revenue reporting in 2008 for subcontracted transportation revenues previously reported on a gross basis.
(3)
Note: Earnings per share amounts are calculated independently for each component and may not be additive due to rounding.
19
20. Business Segment Revenue
2008 Forecast
% Growth
vs. 2007
Fleet Management Solutions:
Gross Revenue (1) 3%
Operating Revenue 4%
- Contractual Revenue (2) 5%
- Commercial Rental Revenue 0 - 2%
Supply Chain Solutions:
Gross Revenue (3)(4) (22 - 24)%
Operating Revenue 5 - 10%
Dedicated Contract Carriage:
Gross Revenue (4) 3 - 5%
Operating Revenue 3 - 5%
(1)
Includes fuel revenue.
(2)
Includes full service lease and contract maintenance.
(3)
Includes impact of net revenue reporting in 2008 for revenues previously reported on a gross basis.
(4)
Includes subcontracted transportation revenue.
20
22. Business Segment Earnings
Full Year
Segment NBT as % of Operating Revenue (1)
Segment NBT as % of Total Revenue
15
13.0
12.6 12.5
12.4
Fleet 13 11.2
Management 11
8.2
Solutions 7.5
9
7.3
9.0 9.0 9.5
9.0
7
8.7
5.9 6.7 6.0
5
2001 2002 2003 2004 2005 2006 2007 2008 Forecast
Midpoint
5.4
5.3
4.8
4.2 3.9
5 4.0
4.4
3
Supply Chain 3.1
2.9 2.8
2.7 2.4
1 (0.6)
Solutions (0.8)
-1
2001 2002 2003 2004 2005 2006 2007 2008 Forecast
(0.6) (0.4) Midpoint
8.9
8.6
9
7.8 8.7
Dedicated 8.4
6.9
Contract 6.7
6.3
7
6.1 7.5
Carriage 5.9
6.8 6.5
6.2 6.0 5.8
5
2001 2002 2003 2004 2005 2006 2007 2008 Forecast
Midpoint
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel services revenue
(1)
net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation as fuel is largely a pass through
to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is excluded from the
operating revenue computation as prior to 2008 it was largely a pass through to customers and the Company realized minimal changes in profitability as a result of fluctuations in
subcontracted transportation. 22
23. Capital Expenditures
Full Service Lease:
► Capital for lease vehicles is committed after contracts are signed
with customers
► 2008 lease capital expenditures include:
● Replacement spending of $1,015 - $1,045 million
● Growth spending of $100 - $170 million
Growth capital represents an investment which results in $20 - $30
million of incremental 2008 revenue or $40 - $60 million of annualized
revenue
Commercial Rental:
► 2008 rental capital expenditures include:
● Replacement spending of $140 million
23
24. Capital Expenditures, Cash Flow & Leverage
($ Millions)
Full Year
2008
Forecast 2007
Full Service Lease - Replacement $1,015 - 1,045
Full Service Lease - Growth 100 - 170
Full Service Lease 1,115 - 1,215 $ 900
Commercial Rental 140 219
Operating Property and Equipment 130 76
Gross Capital Expenditures 1,385 - 1,485 1,195
Less: Proceeds from Sales 335 374
Less: Proceeds from Sale and Leaseback of
Revenue Earning Equipment - 150
Net Capital Expenditures $1,050 - 1,150 $ 671
Assets Under Management $8,295 - 8,395 $ 8,053
Cash Provided by Operating Activities $1,165 - 1,265 $ 1,103
Total Cash Generated (1) $1,555 - 1,655 $ 1,692
Free Cash Flow (1)(2) $ 185 - 220 $ 375
(1)
Total Obligations to Equity 158% 157%
(1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures.
(2) Free Cash Flow excludes acquisitions. Acquisitions totaled $75 million in full year 2007 and $91 million in 2008 year-to-date.
24
25. EPS Forecast
($ Earnings Per Share)
First Quarter Full Year
2008 EPS Forecast $ 0.84 - 0.87 $ 4.50 - 4.65
(1)
2007 Comparable EPS $ 0.84 $ 4.21
(1) Non-GAAP financial measure. 2007 Comparable EPS excludes impact from restructuring costs in the third and
fourth quarters, property gain in the third quarter and the fourth quarter tax law changes in totaling a $0.03 benefit.
25
26. Summary
Drive growth from customer outsourcing in contractual product
lines while managing through cyclical impacts
► Focus on strong customer retention, new business development and
sales/marketing initiatives
► Continue growth in full service lease/contract maintenance, supply
chain solutions and dedicated contract carriage product lines
► Manage through cyclical impacts in commercial rental product line
► Utilize balance sheet capacity to support growth and financial
leverage targets
► Sustain focus on cost management and process improvements, while
investing in sales and operational capabilities
26
28. Appendix
Business Segment Detail
Central Support Services
Balance Sheet
Asset Management
Financial Indicators Forecast
Non-GAAP Financial Measures & Reconciliations
28
29. Fleet Management Solutions (FMS)
($ Millions)
Fourth Quarter
2007 2006 % B/(W)
$ 503.9 $ 472.4 7%
Full Service Lease
41.6 37.9 10%
Contract Maintenance
545.5 510.3 7%
Contractual Revenue
48.5 48.7 (1)%
Contract-related Maintenance
152.0 163.4 (7)%
Commercial Rental
18.8 18.9 (1)%
Other
(a)
764.8 741.3 3%
Operating Revenue
320.6 264.1 21%
Fuel Services Revenue
$ 1,085.4 $ 1,005.4 8%
Total Revenue
$ 102.3 $ 94.5 8%
Segment Net Before Tax Earnings (NBT)
9.4% 9.4%
Segment NBT as % of Total Revenue
(a)
Segment NBT as % of Operating Revenue 13.4% 12.8%
(a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the FMS business segment and as
a measure of sales activity. Fuel services revenue, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating
revenue computation as fuel is largely a pass-through to customers for which the Company realizes minimal changes in profitability during periods of
steady market fuel prices. However, profitability may be positively or negatively impacted by increases or decreases in market fuel prices during a
short period of time as customer pricing for fuel services is established based on market fuel costs.
29
30. Fleet Management Solutions (FMS)
($ Millions)
Full Year
2007 2006 % B/(W)
$ 1,965.3 $ 1,848.3 6%
Full Service Lease
159.6 141.9 12%
Contract Maintenance
2,124.9 1,990.2 7%
Contractual Revenue
198.8 193.1 3%
Contract-related Maintenance
583.3 665.7 (12)%
Commercial Rental
72.4 72.1 -
Other
(a)
2,979.4 2,921.1 2%
Operating Revenue
1,183.2 1,174.9 1%
Fuel Services Revenue
$ 4,162.6 $ 4,096.0 2%
Total Revenue
$ 373.7 $ 368.1 2%
Segment Net Before Tax Earnings (NBT)
9.0% 9.0%
Segment NBT as % of Total Revenue
(a)
Segment NBT as % of Operating Revenue 12.5% 12.6%
(a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the FMS business segment and as
a measure of sales activity. Fuel services revenue, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating
revenue computation as fuel is largely a pass-through to customers for which the Company realizes minimal changes in profitability during periods of
steady market fuel prices. However, profitability may be positively or negatively impacted by increases or decreases in market fuel prices during a
short period of time as customer pricing for fuel services is established based on market fuel costs.
30
31. Supply Chain Solutions (SCS)
($ Millions)
Fourth Quarter
2007 2006 % B/(W)
U.S. Operating Revenue
$ 141.3 $ 127.4 11%
Automotive & Industrial
69.4 74.1 (6)%
High Tech & Consumer Industries
8.2 8.3 -
Transportation Management
(a)
218.9 209.8 4%
U.S. Operating Revenue
(a)
118.3 110.3 7%
International Operating Revenue
(a)
337.2 320.1 5%
Operating Revenue
208.6 223.0 (6)%
Subcontracted Transportation
$ 545.8 $ 543.1 1%
Total Revenue
$ 18.9 $ 17.0 11%
Segment Net Before Tax Earnings (NBT)
3.5% 3.1%
Segment NBT as % of Total Revenue
(a)
5.6% 5.3%
Segment NBT as % of Operating Revenue
$ 35.6 $ 24.9 (43)%
Memo: Fuel Costs
(a)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the SCS business segment
and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as
subcontracted transportation is largely a pass-through to customers. The Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation.
31
32. Supply Chain Solutions (SCS)
($ Millions)
Full Year
2007 2006 % B/(W)
U.S. Operating Revenue
$ 551.7 $ 495.4 11%
Automotive & Industrial
288.9 291.9 (1)%
High Tech & Consumer Industries
32.6 30.7 6%
Transportation Management
(a)
873.2 818.0 7%
U.S. Operating Revenue
(a)
441.3 364.9 21%
International Operating Revenue
(a)
1,314.5 1,182.9 11%
Operating Revenue
935.8 845.6 11%
Subcontracted Transportation
$ 2,250.3 $ 2,028.5 11%
Total Revenue
$ 63.2 $ 62.1 2%
Segment Net Before Tax Earnings (NBT)
2.8% 3.1%
Segment NBT as % of Total Revenue
(a)
4.8% 5.3%
Segment NBT as % of Operating Revenue
$ 124.5 $ 104.2 (19)%
Memo: Fuel Costs
(a)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the SCS business segment
and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as
subcontracted transportation is largely a pass-through to customers. The Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation.
32
33. Dedicated Contract Carriage (DCC)
($ Millions)
Fourth Quarter
2007 2006 % B/(W)
(a)
Operating Revenue $ 140.3 $ 135.6 3%
4.0 4.6 (14)%
Subcontracted Transportation
$ 144.3 $ 140.2 3%
Total Revenue
$ 12.3 $ 11.2 9%
Segment Net Before Tax Earnings (NBT)
8.5% 8.0%
Segment NBT as % of Total Revenue
(a)
Segment NBT as % of Operating Revenue 8.7% 8.3%
$ 29.3 $ 24.3 (21)%
Memo: Fuel Costs
(a)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the DCC business segment
and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as
subcontracted transportation is largely a pass-through to customers. The Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation.
33
34. Dedicated Contract Carriage (DCC)
($ Millions)
Full Year
2007 2006 % B/(W)
(a)
Operating Revenue $ 552.9 $ 548.9 1%
14.7 19.9 (26)%
Subcontracted Transportation
$ 567.6 $ 568.8 -
Total Revenue
$ 47.4 $ 42.6 11%
Segment Net Before Tax Earnings (NBT)
8.4% 7.5%
Segment NBT as % of Total Revenue
(a)
Segment NBT as % of Operating Revenue 8.6% 7.8%
$ 107.1 $ 104.6 (2)%
Memo: Fuel Costs
(a)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the DCC business segment
and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as
subcontracted transportation is largely a pass-through to customers. The Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation.
34
39. (a)
Assets Under Management
($ Millions)
Forecast
Midpoint
(b)
2000 2001 2002 2003 2004 2005 2006 2007 2008
Revenue Earning Equipment $ 4,588 $ 4,148 $ 4,493 $ 5,809 $ 6,352 $ 6,658 $ 7,335 $ 7,225 $ 7,520
Direct Finance Leases 637 640 622 656 649 624 592 582 580
Operating Leases 1,805 2,140 1,511 286 300 252 214 246 245
Assets Under Management $ 7,030 $ 6,928 $ 6,626 $ 6,751 $ 7,301 $ 7,534 $ 8,141 $ 8,053 $ 8,345
(a) Assets under management represent the original cost of all vehicles owned and held under lease by Ryder.
(b) Excludes impact of foreign exchange movements in 2008.
39
40. Financial Indicators Forecast (1)
($ Millions)
Total Cash Generated (2) Gross Capital Expenditures
$1,760
$1,692 Revenue Earning Equipment
$1,605
$1,381 $1,435
$1,411
PP&E/Other
$1,255 $1,289
$1,183 $1,165 $1,195
$1,091
$1,054
$949
$835
$725
$657 $600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008
Forecast Forecast
Midpoint Midpoint
Memo: Free Cash Flow (2)
(3)
(270) 131 367 260 140 (231) (444) 375 205
Total Obligations to Equity Ratio (2)
275% Equity
234% Total Obligations (2)
201%
168% 157% 158%
151%
146%
129% Significant and predictable cash generation
Invest in growth
Increase assets under management
2000 2001 2002 2003 2004 2005 2006 2007 2008
Forecast
Increase financial leverage
Midpoint
Memo: Assets Under Management
7,030 6,928 6,626 6,751 7,301 7,534 8,141 8,053 8,345
Obligations to Equity and Assets Under Management include acquisitions. Free Cash Flow and Gross Capital Expenditures exclude acquisitions.
(1)
Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures.
(2)
Includes $176 million payment to the IRS related to full resolution of 1998 - 2000 tax period matters.
(3)
40
41. Non-GAAP Financial Measures
► This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC
rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP
measure and an explanation why management believes that presentation of the non-GAAP financial
measure provides useful information to investors. Non-GAAP financial measures should be considered in
addition to, but not as a substitute for or superior to, other measures of financial performance prepared in
accordance with GAAP.
► Specifically, the following non-GAAP financial measures are included in this presentation:
Reconciliation & Additional Information
Non-GAAP Financial Measure Comparable GAAP Measure Presented on Slide Titled Page
Operating Revenue Total Revenue Key Financial Statistics 6 - 7, 19
Comparable Earnings Per Share / Comparable Net Earnings / Net Earnings Per Share EPS and Net Earnings Reconciliation 42
Net Earnings
Earnings Before Restructuring and Income Taxes Net Earnings Business Segment 8-9
Adjusted Return on Capital Net Earnings Adjusted Return on Capital Reconciliation 43
Total Cash Generated / Free Cash Flow Cash Provided by Operating Activities Cash Flow Reconciliation 44 - 45
Total Obligations / Total Obligations to Equity Balance Sheet Debt / Debt to Equity Debt to Equity Ratio 12
Debt to Equity Reconciliation 46 - 47
FMS / SCS / DCC Operating Revenue and Segment FMS / SCS / DCC Total Revenue and Segment Fleet Management Solutions / Supply Chain 29 - 34
NBT as % of Operating Revenue NBT as % of Total Revenue Solutions / Dedicated Contract Carriage
41
42. EPS and Net Earnings Reconciliation
($ Millions or $ Earnings Per Share)
4Q07 - 4Q07 - FY07 - FY07 -
Net Earnings EPS Net Earnings EPS
Net Earnings $ 71.9 $ 1.24 $ 253.9 $ 4.24
3Q07 and 4Q07 Restructuring (Recoveries)/Charges (0.3) - 7.5 0.13
Gain on Sale of Property - - (6.2) (0.10)
Tax Law Changes (3.3) (0.06) (3.3) (0.06)
Comparable Net Earnings $ 68.3 $ 1.18 $ 251.9 $ 4.21
4Q06 - 4Q06 - FY06 - FY06 -
Net Earnings EPS Net Earnings EPS
Net Earnings $ 65.8 $ 1.08 $ 249.0 $ 4.04
Pension Accounting Charge - - 3.7 0.06
Tax Law Changes - - (6.8) (0.11)
Comparable Net Earnings $ 65.8 $ 1.08 $ 245.9 $ 3.99
* Earnings per share amounts are calculated independently for each component and may not be additive due to rounding
42
43. Adjusted Return on Capital Reconciliation
($ Millions)
Forecast
Midpoint
12/31/08 12/31/07 12/31/06
(1)
Net Earnings $ 259 $ 254 $ 249
Restructuring and Other Items - 1 -
Income Taxes 166 152 144
Adjusted Earnings Before Income Taxes 425 407 393
(2)
Adjusted Interest Expense 178 169 147
(3)
Adjusted Income Taxes (236) (220) (207)
Adjusted Net Earnings $ 367 $ 356 $ 333
Average Total Debt $ 2,825 $ 2,848 $ 2,480
Average Off-Balance Sheet Debt 155 150 99
(4)
Average Adjusted Total Shareholders' Equity 1,889 1,792 1,605
Adjusted Average Total Capital $ 4,869 $ 4,790 $ 4,184
(5)
Adjusted Return on Capital 7.6% 7.4% 7.9%
Earnings calculated based on a 12-month rolling period.
(1)
Interest expense includes implied interest on off-balance sheet vehicle obligations.
(2)
Income taxes were calculated using the effective income tax rate for the period exclusive of benefits from tax law changes recognized in 2006 and the fourth quarter of 2007.
(3)
Represents shareholders’ equity adjusted for the tax benefits in those periods.
(4)
The Company adopted adjusted return on capital, a non GAAP financial measure, as the Company believes that both debt (including off-balance sheet debt) and equity
(5)
should be included in evaluating how effectively capital is utilized across the business.
43
44. Cash Flow Reconciliation
($ Millions)
(4)
12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
Cash Provided by Operating Activities $ 1,023 $ 365 $ 617 $ 803 $ 867 $ 779 $ 854 $ 1,103
Less: Changes in Balance of Trade Receivables Sold (270) 235 110 - - - - -
Collections of Direct Finance Leases 67 66 66 61 64 70 66 63
Proceeds from Sales (Primarily Revenue Earning Equipment) 230 173 152 210 331 334 333 374
Proceeds from Sale and Leaseback of Assets - - - 13 118 - - 150
Other Investing, Net 4 (4) 4 4 1 - 2 2
(1)
Total Cash Generated 1,054 835 949 1,091 1,381 1,183 1,255 1,692
(2)
Capital Expenditures (1,296) (704) (582) (734) (1,092) (1,399) (1,695) (1,317)
(3)(5)
Free Cash Flow $ (242) $ 131 $ 367 $ 357 $ 289 $ (216) $ (440) $ 375
Memo:
Depreciation Expense $ 580 $ 545 $ 552 $ 625 $ 706 $ 740 $ 743 $ 816
Gains on Vehicle Sales, Net $ 19 $ 12 $ 14 $ 16 $ 35 $ 47 $ 51 $ 44
The Company uses total cash generated, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance.
(1)
Management believes total cash generated provides investors with an important measure of total cash inflows generated from our on-going business activities which include sales of
revenue earning equipment, sales of operating property and equipment, sale and leaseback of revenue earning equipment, collections on direct finance leases and other cash inflows.
Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment.
(2)
The Company uses free cash flow, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. Management
(3)
believes free cash flow provides investors with an important perspective on the cash available for debt service and shareholders after making capital investments required to support
ongoing business operations. The calculation of free cash flow may be different from the calculation used by other companies and therefore comparability may be limited.
Amounts have not been recasted to give effect for the impact of foreign exchange movements on cash for which the impact is not expected to be significant.
(4)
Free Cash Flow excludes acquisitions.
(5)
44
45. Cash Flow Reconciliation
($ Millions)
Midpoint
12/31/08
Cash Provided by Operating Activities $ 1,215
Collections of Direct Finance Leases 55
Proceeds from Sales (Primarily Revenue Earning Equipment) 335
Proceeds from Sale and Leaseback of Revenue Earning Equipment -
(1)
Total Cash Generated 1,605
(2)
Capital Expenditures (1,400)
(3)
Free Cash Flow $ 205
The Company uses total cash generated, a non-GAAP financial measure, because management considers it to be an important measure of
(1)
comparative operating performance. Management believes total cash generated provides investors with an important measure of total cash inflows
generated from our on-going business activities which include sales of revenue earning equipment, sales of operating property and equipment, sale and
leaseback of revenue earning equipment, collections on direct finance leases and other cash inflows.
Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment.
(2)
The Company uses free cash flow, a non-GAAP financial measure, because management considers it to be an important measure of comparative
(3)
operating performance. Management believes free cash flow provides investors with an important perspective on the cash available for debt service and
shareholders after making capital investments required to support ongoing business operations. The calculation of free cash flow may be different from
the calculation used by other companies and therefore comparability may be limited.
45
46. Debt to Equity Reconciliation
($ Millions)
% to % to % to % to % to % to % to % to
12/31/00 Equity 12/31/01 Equity 12/31/02 Equity 12/31/03 Equity 12/31/04 Equity 12/31/05 Equity 12/31/06 Equity 12/31/07 Equity
Balance Sheet Debt $2,017 161% $1,709 139% $1,552 140% $1,816 135% $1,783 118% $2,185 143% $2,817 164% $2,776 147%
Receivables Sold 345 110 - - - - - -
PV of minimum
lease payments
and guaranteed
residual values
under operating
leases for
vehicles 879 625 370 153 161 117 78 178
PV of contingent
rentals under
securitizations 209 441 311 - - - - -
Total Obligations (1) $3,450 275% $2,885 234% $2,233 201% $1,969 146% $1,944 129% $2,302 151% $2,895 168% $2,954 157%
(1) The Company uses total obligations and total obligations to equity, non-GAAP financial measures, which include certain off-balance sheet
financial obligations relating to revenue earning equipment. Management believes these non-GAAP financial measures are useful to investors
as they are more complete measures of the Company’s existing financial obligations and help investors better assess the Company’s overall
leverage position.
Note: In connection with adopting FIN 46 effective July 1, 2003, the Company consolidated the vehicle securitization trusts previously disclosed as
off-balance sheet debt.
46
