Full Description

Ryder System, Inc. (Ryder) is a provider of transportation and supply chain management solutions. The Company operates in three segments: Fleet Management Solutions (FMS), which provides full-service leasing, contract maintenance, contract-related maintenance and commercial rental of trucks, tractors and trailers to customers principally in the United States, Canada and the United Kingdom; Supply Chain Solutions (SCS), which provides supply chain solutions, including distribution and transportation services throughout North America, and in Latin America, Europe and Asia, and Dedicated Contract Carriage (DCC), which provides vehicles and drivers as part of a dedicated transportation solution in the United States. On January 11, 2008, it announced the completion of the acquisition of substantially all the assets of the Full Service Truck Leasing, Commercial Truck Rental and Contract Maintenance businesses of Lily Transportation Corp. In the transaction, Ryder acquired Lily's fleet of approximately 1600 vehicles and over 200 contract customers. On October 5, 2007, the Company completed the acquisition of substantially all of the assets of Pollock NationaLease, under which it acquired Pollock’s fleet of approximately 2,000 vehicles and nearly 200 contractual customers served by six locations.

Fleet Management Solutions

The Company’s FMS product offering includes primarily contractual-based, full-service leasing and contract maintenance services. Ryder also offers transactional fleet solutions, including commercial truck rental, maintenance services and value-added fleet support services, such as insurance, vehicle administration and fuel services. In addition, the Company provides its customers with access to a selection of used trucks, tractors and trailers through its used vehicle sales program. During the year ended December 31, 2007, Ryder’s global FMS business accounted for 57% of its revenue. The Company’s FMS customers in the United States range from small businesses to large national enterprises. These customers operate in a variety of industries, including beverage, newspaper, grocery, lumber and wood products, home furnishings and metal. As of December 31, 2007, Ryder had a United States fleet of approximately 126,400 commercial trucks, tractors and trailers leased or rented through 683 locations in 49 states and Puerto Rico. On December 31, 2007, the Company operated 221 on-site maintenance facilities in the United States and Puerto Rico.

Ryder’s domestic FMS business is divided into three regions: East, Central and West. Each region is divided into 8 to 16 business units (BU) and each BU contains approximately 10 to 30 branch offices. A branch office consists of a maintenance facility or shop, offices for sales and other personnel, and in many cases, a commercial rental counter. The Company’s maintenance facilities include a service island for fueling, safety inspections and preliminary maintenance checks, as well as a shop for preventive maintenance and repairs.

Under a full-service lease, Ryder provides vehicle maintenance, supplies and related equipment necessary for operation of the vehicles, while its customers furnish and supervise their own drivers, and dispatch and exercise control over the vehicles. As of December 31, 2007, the Company leased approximately 95,900 vehicles under full-service leases in the United States. As of December 31, 2007, Ryder had approximately 11,000 full-service lease customer accounts in the United States.

The Company’s contract maintenance customers include its full-service lease customers, as well as other customers that want to utilize its network of maintenance facilities and trained technicians to maintain the vehicles they own or lease from third parties, usually a bank or other financial institution. The contract maintenance service offering is designed to reduce vehicle downtime through preventive and predictive maintenance based on vehicle type and driving habits, vehicle repair, including parts and labor, around-the-clock emergency roadside service and replacement vehicles for vehicles that are temporarily out of service. These vehicles are serviced at Ryder’s own facilities. As of December 31, 2007, Ryder had approximately 1,100 contract maintenance customer accounts in the United States, 500 of which are not full-service lease customers.

Ryder’s commercial rental fleet provides additional vehicles to its full-service lease customers to handle their peak or seasonal business needs. In addition to vehicle rental, the Company extends to its rental customers liability insurance coverage. As of December 31, 2007, a fleet of approximately 28,100 vehicles, ranging from heavy-duty tractors and trailers to light-duty trucks, were available for commercial short-term rental in the United States. The utilization rate of the United States rental fleet during 2007 was approximately 71%. At December 31, 2007, the Company had approximately 10,300 commercial rental customer accounts in the United States

The Company’s full-service lease and contract maintenance customers periodically require additional maintenance services that are not included in their contracts. Additional maintenance services may arise when a customer’s driver damages the vehicle and these services are performed or managed by Ryder. Some customers also periodically require maintenance work on vehicles that are not covered by a lease or maintenance contract. The Company may provide service on these vehicles and charge the customer on an hourly basis for work performed. This contract-related maintenance work is obtained by Ryder due to its contractual relationship with the customers. The service provided is in addition to that included in their contractual agreements.

Ryder’s offer fleet support services, such as insurance, safety, fuel, administrative, environmental management and information technology. The Company sells its used vehicles at one of its 58 sales centers throughout North America, at its branch locations or through its Website at www.Usedtrucks.Ryder.com.

Supply Chain Solutions

Through its SCS business, the Company offers a range of logistics management services that are designed for a customer’s global supply chain. Ryder’s SCS product offerings are organized into three categories: professional services, distribution operations and transportation solutions. The Company also offers its SCS customers a variety of information technology solutions, referred to as e-fulfillment, which are an integral part of its other SCS services. In 2007, Ryder’s SCS business accounted for 34% of its revenue. As of December 31, 2007, the Company had 102 SCS customer accounts in the United States. These customers operate in a variety of industries, including automotive, electronics, high-tech, telecommunications, industrial, consumer goods, paper and paper products, office equipment, food and beverage, and general retail industries. Ryder’s largest customer is General Motors Corporation (GM). In 2007, GM accounted for approximately 42% of SCS total revenue and 19% of SCS operating revenue and 14% of consolidated Ryder revenue.

Ryder’s core SCS business operations in the United States revolve around its customers’ supply chains and are geographically located. These SCS facilities are typically leased. As of December 31, 2007, leased SCS warehouse space totaled approximately nine million square feet for the United States and Puerto Rico. Along with those core customer specific locations, the Company also focuses certain logistics capabilities in locations not associated with specific customer sites. Ryder’s carrier procurement, contract management and freight bill audit and payment services groups operate out of its carrier management center in Ann Arbor, Michigan, and its transportation optimization and execution groups operate out of its logistics centers in Farmington Hills, Michigan and Ft. Worth, Texas.

The Company’s SCS business offers a variety of consulting services that support every aspect of a customer’s supply chain. The solutions offered may include both a distribution plan that sets forth the number, location and function of each distribution facility and a transportation solution that sets forth the mode or modes of transportation and route selection. In addition to providing the distribution and transportation capability necessary to implement the supply chain solution, Ryder’s SCS representatives can coordinate and manage all aspects of the customer’s supply chain provider network. The Company also provides transportation consulting services to its SCS customers.

Ryder’s SCS business offers a range of services relating to a customer’s distribution operations. These services include designing a customer’s distribution or warehouse facility; managing the customer’s existing distribution facilities or a facility it acquires in order to provide the agreed-upon services’ managing the flow of goods directly from the receiving function to the shipping function; coordinating warehousing and transportation for inbound material flows; handling import and export for international shipments; coordinating just-in-time replenishment of component parts to manufacturing and final assembly, and providing additional value-added services, such as light assembly of components into defined units (kitting), packaging and refurbishment.

The Company’s SCS business offers services relating to all aspects of a customer’s transportation network. Ryder provides shipment planning and execution, which includes shipment consolidation, load scheduling and delivery confirmation through a series of technological and Web-based solutions. In addition, the Company’s SCS business provides customers, as well as its FMS and DCC businesses with capacity management services that are designed to create load-building opportunities and minimize excess capacity.

Dedicated Contract Carriage

Through its DCC business segment, Ryder combines the equipment, maintenance and administrative services of a full-service lease with additional services to provide a customer with a dedicated transportation solution. Such additional services include driver hiring and training, routing and scheduling, fleet sizing, safety, regulatory compliance, risk management, technology and communication systems support, including on-board computers and other technical support. In 2007, the Company’s DCC business accounted for 9% of its revenue. As of December 31, 2007, Ryder had 300 DCC customer accounts in the United States.

International

The Company has FMS operations in Canada and the United Kingdom, and SCS operations in Canada, Latin America, Europe and Asia. Ryder’s FMS operations in Canada include full-service leasing, contract maintenance, contract-related maintenance and commercial rental. The Company also offers fleet support services, such as insurance, fuel services and administrative services. As of December 31, 2007, Ryder had a fleet of approximately 12,400 commercial trucks, tractors and trailers leased or rented from 52 locations, including two onsite maintenance facility, throughout six Canadian provinces. As of December 31, 2007, the Company leased vehicles to over 1,400 full-service lease customer accounts in Canada and performed contract maintenance on approximately 120 customer accounts. Ryder’s Canadian SCS operations also include a range of services, including lead logistics management services, and distribution and transportation solutions. As of December 31, 2007, the Company had 60 SCS customer accounts and leased SCS warehouse space totaling approximately 700,000 square feet in Canada.

Ryder’s FMS operations in Europe include full-service leasing, contract maintenance, contract-related maintenance and commercial rental. The Company also offers fleet support services, such as insurance, fuel services, administrative services, driver capability and on-board technology. As of December 31, 2007, Ryder had a fleet of approximately 11,800 commercial trucks, tractors and trailers leased or rented through 39 locations throughout the United Kingdom, Ireland and Germany. The Company also manages a network of over 300 independent maintenance facilities in the United Kingdom to serve its customers. In addition to its typical FMS operations, Ryder also supplies and manages vehicles, equipment and personnel for military organizations in the United Kingdom and Germany. As of December 31, 2007, the Company leased vehicles to over 1,000 full-service lease customer accounts in Europe.

Ryder’s European SCS operations include a range of service offerings, including lead logistics management services, distribution and transportation solutions, and logistics consulting and design services. In addition, the Company operates a shipment, planning and execution system through its European transportation management services center located in Düsseldorf, Germany. As of December 31, 2007, Ryder had 24 SCS customer accounts and leased SCS warehouse space totaling approximately 200,000 square feet in Europe.

In Mexico, Brazil, Argentina and Chile, the Company offers a range of SCS services, including managing distribution operations and cross-docking terminals, and designing and managing customer specific solutions. In its Argentina and Brazil operations, Ryder also offers international transportation services for freight moving between these markets, including transportation, backhaul and customs procedure management. Its Mexican operations also manage more than 3,000 border crossings each week between Mexico and the United States. As of December 31, 2007, the Company had 215 SCS customer accounts and leased SCS warehouse space totaling approximately five million square feet in Latin America.

The Company provides services in China via its Shanghai office and coordinates logistics activities in countries, such as Malaysia. Ryder offers a range of SCS services to customers in Asia, including management of distribution operations, domestic transportation management, coordination, scheduling and management of international freight movement, postponement, bundling and other customization activities, and freight procurement. As of December 31, 2007, the Company had 56 SCS customer accounts and leased SCS warehouse space totaling approximately 441,000 square feet in Asia.