Edgar Filing: RYDER SYSTEM INC

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e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 1-4364

RYDER SYSTEM, INC.

(Exact name of registrant as specified in its charter)


Florida		59-0739250
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

11690 N.W. 105th Street
Miami, Florida 33178		(305) 500-3726
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES o NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) o YES þ NO

The number of shares of Ryder System, Inc. Common Stock ($0.50 par value per share) outstanding at March 31, 2010 was 52,989,869.

RYDER SYSTEM, INC.
FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS


	Page No.
PART I FINANCIAL INFORMATION

ITEM 1 Financial Statements (unaudited)

Consolidated Condensed Statements of Earnings — Three months ended March 31, 2010 and 2009		1

Consolidated Condensed Balance Sheets — March 31, 2010 and December 31, 2009		2

Consolidated Condensed Statements of Cash Flows — Three months ended March 31, 2010 and 2009		3

Consolidated Condensed Statement of Shareholders’ Equity — Three months ended March 31, 2010		4

Notes to Consolidated Condensed Financial Statements		5

ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk		35

ITEM 4 Controls and Procedures		35

PART II OTHER INFORMATION

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds		35

ITEM 6 Exhibits		36

SIGNATURES		37
EX-31.1
EX-31.2
EX-32

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RYDER SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

(unaudited)


	Three months ended March 31,
	2010			2009
	(In thousands, except per share amounts)

Revenue	$	1,219,938			1,174,396


Operating expense (exclusive of items shown separately)		577,614			534,535
Salaries and employee-related costs		304,712			301,213
Subcontracted transportation		60,337			41,182
Depreciation expense		211,005			221,585
Gains on vehicle sales, net		(4,518	)		(3,403	)
Equipment rental		16,455			15,339
Interest expense		33,336			38,137
Miscellaneous (income) expense, net		(1,495	)		625
Restructuring and other charges, net		—			2,752

		1,197,446			1,151,965

Earnings from continuing operations before income taxes		22,492			22,431
Provision for income taxes		9,620			11,491

Earnings from continuing operations		12,872			10,940
Loss from discontinued operations, net of tax		(499	)		(4,102	)

Net earnings	$	12,373			6,838


Earnings (loss) per common share — Basic
Continuing operations	$	0.24			0.20
Discontinued operations		(0.01	)		(0.08	)

Net earnings	$	0.23			0.12


Earnings (loss) per common share — Diluted
Continuing operations	$	0.24			0.20
Discontinued operations		(0.01	)		(0.08	)

Net earnings	$	0.23			0.12


Cash dividends declared and paid per common share	$	0.25			0.23

See accompanying notes to consolidated condensed financial statements.

RYDER SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(unaudited)


	March 31,			December 31,
	2010			2009
	(Dollars in thousands, except per
	share amount)
Assets:
Current assets:
Cash and cash equivalents	$	115,127		$	98,525
Receivables, net of allowance of $11,767 and $13,808, respectively		594,764			598,661
Inventories		50,700			50,146
Prepaid expenses and other current assets		126,512			133,041

Total current assets		887,103			880,373
Revenue earning equipment, net of accumulated depreciation of $3,060,262 and $3,013,179, respectively		4,184,838			4,178,659
Operating property and equipment, net of accumulated depreciation of $864,784 and $855,657, respectively		541,310			543,910
Goodwill		216,985			216,444
Intangible assets		38,723			39,120
Direct financing leases and other assets		393,719			401,324

Total assets	$	6,262,678		$	6,259,830


Liabilities and shareholders’ equity:
Current liabilities:
Short-term debt and current portion of long-term debt	$	206,911		$	232,617
Accounts payable		338,017			262,712
Accrued expenses and other current liabilities		384,688			354,945

Total current liabilities		929,616			850,274
Long-term debt		2,216,904			2,265,074
Other non-current liabilities		681,002			681,613
Deferred income taxes		1,026,925			1,035,874

Total liabilities		4,854,447			4,832,835


Shareholders’ equity:
Preferred stock of no par value per share — authorized, 3,800,917; none outstanding, March 31, 2010 or December 31, 2009		—			—
Common stock of $0.50 par value per share — authorized, 400,000,000; outstanding, March 31, 2010 — 52,989,869; December 31, 2009 — 53,419,721		26,495			26,710
Additional paid-in capital		739,152			743,026
Retained earnings		1,020,482			1,036,178
Accumulated other comprehensive loss		(377,898	)		(378,919	)

Total shareholders’ equity		1,408,231			1,426,995

Total liabilities and shareholders’ equity	$	6,262,678		$	6,259,830

See accompanying notes to consolidated condensed financial statements.

RYDER SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)


	Three months ended March 31,
	2010			2009
	(In thousands)
Cash flows from operating activities from continuing operations:
Net earnings	$	12,373		$	6,838
Less: Loss from discontinued operations, net of tax		(499	)		(4,102	)

Earnings from continuing operations		12,872			10,940
Depreciation expense		211,005			221,585
Gains on vehicle sales, net		(4,518	)		(3,403	)
Share-based compensation expense		3,941			4,771
Amortization expense and other non-cash charges, net		10,266			8,997
Deferred income tax (benefit) expense		(11,070	)		5,079
Changes in operating assets and liabilities, net of acquisitions:
Receivables		(410	)		59,399
Inventories		(423	)		501
Prepaid expenses and other assets		6,721			(6,768	)
Accounts payable		311			(6,803	)
Accrued expenses and other non-current liabilities		42,800			(25,973	)

Net cash provided by operating activities from continuing operations		271,495			268,325


Cash flows from financing activities from continuing operations:
Net change in commercial paper borrowings		(52,000	)		266,089
Debt proceeds		710			66
Debt repaid, including capital lease obligations		(27,381	)		(275,367	)
Dividends on common stock		(13,384	)		(12,858	)
Common stock issued		1,991			1,209
Common stock repurchased		(25,074	)		—
Excess tax benefits from share-based compensation		301			190
Debt issuance costs		(58	)		—

Net cash used in financing activities from continuing operations		(114,895	)		(20,671	)


Cash flows from investing activities from continuing operations:
Purchases of property and revenue earning equipment		(200,101	)		(251,992	)
Sales of revenue earning equipment		48,433			45,151
Sales of operating property and equipment		526			785
Acquisitions		(2,409	)		(85,454	)
Collections on direct finance leases		15,576			21,468
Changes in restricted cash		2,791			11,208

Net cash used in investing activities from continuing operations		(135,184	)		(258,834	)


Effect of exchange rate changes on cash		(1,696	)		(1,488	)

Increase (decrease) in cash and cash equivalents from continuing operations		19,720			(12,668	)


Cash flows from discontinued operations:
Operating cash flows		(5,199	)		(14,530	)
Financing cash flows		1,034			(2,284	)
Investing cash flows		1,132			1,215
Effect of exchange rate changes on cash		(85	)		(464	)

Decrease in cash and cash equivalents from discontinued operations		(3,118	)		(16,063	)


Increase (decrease) in cash and cash equivalents		16,602			(28,731	)
Cash and cash equivalents at January 1		98,525			120,305

Cash and cash equivalents at March 31	$	115,127		$	91,574

See accompanying notes to consolidated condensed financial statements.

RYDER SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS’ EQUITY

(unaudited)


															Accumulated
	Preferred								Additional						Other
	Stock		Common Stock						Paid-In			Retained			Comprehensive
	Amount		Shares			Par			Capital			Earnings			Loss			Total
	(Dollars in thousands, except per share amount)

Balance at December 31, 2009	$	—		53,419,721		$	26,710			743,026			1,036,178			(378,919	)		1,426,995


Components of comprehensive income:
Net earnings		—		—			—			—			12,373			—			12,373
Foreign currency translation adjustments		—		—			—			—			—			(1,650	)		(1,650	)
Amortization of pension and postretirement items, net of tax		—		—			—			—			—			2,753			2,753
Change in net actuarial loss, net of tax		—		—			—			—			—			(82	)		(82	)

Total comprehensive income																			13,394
Common stock dividends declared and paid – $0.25 per share		—		—			—			—			(13,384	)		—			(13,384	)
Common stock issued under employee stock option and stock purchase plans ⁽¹⁾		—		292,027			146			1,943			—			—			2,089
Benefit plan stock purchases ⁽²⁾		—		(2,280	)		(1	)		(97	)		—			—			(98	)
Common stock repurchases		—		(719,599	)		(360	)		(10,029	)		(14,685	)		—			(25,074	)
Share-based compensation		—		—			—			3,941			—			—			3,941
Tax benefits from share-based compensation		—		—			—			368			—			—			368

Balance at March 31, 2010	$	—		52,989,869		$	26,495			739,152			1,020,482			(377,898	)		1,408,231


(1)		Net of common shares delivered as payment for the exercise price or to satisfy the option holders’ withholding tax liability upon exercise of options.

(2)		Represents open-market transactions of common shares by the trustee of Ryder’s deferred compensation plans.

See accompanying notes to consolidated condensed financial statements.

RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(unaudited)

(A) INTERIM FINANCIAL STATEMENTS

The accompanying unaudited Consolidated Condensed Financial Statements include the accounts of Ryder System, Inc. (Ryder) and all entities in which Ryder has a controlling voting interest (“subsidiaries”), and variable interest entities (VIEs) required to be consolidated in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with the accounting policies described in our 2009 Annual Report on Form 10-K except for the accounting changes described below relating to transfers of financial assets and consolidation of VIEs, and should be read in conjunction with the Consolidated Financial Statements and notes thereto. These financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included and the disclosures herein are adequate. The operating results for interim periods are unaudited and are not necessarily indicative of the results that can be expected for a full year. Prior year amounts have been restated to conform to the current period presentation.

(B) ACCOUNTING CHANGES

In June 2009, the Financial Accounting Standards Board (FASB) issued accounting guidance which addresses the accounting and disclosure requirements for transfers of financial assets. The guidance is effective for new transfers of financial assets occurring on or after January 1, 2010. The adoption of this accounting guidance did not have a material impact on our consolidated financial position, results of operations or cash flows.

In June 2009, the FASB issued accounting guidance which amends the consolidation principles for variable interest entities by requiring consolidation of VIEs based on which party has control of the entity. The guidance is effective for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. The adoption of this accounting guidance did not have a material impact on our consolidated financial position, results of operations or cash flows.

Edart Leasing LLC Acquisition — On February 2, 2009, we acquired the assets of Edart Leasing LLC (“Edart”), which included Edart’s fleet of approximately 1,600 vehicles and more than 340 contractual customers from Edart’s five locations in Connecticut for a purchase price of $85.2 million, of which $2.1 million and $81.3 million was paid during the three months ended March 31, 2010 and 2009, respectively. Goodwill and customer relationship intangibles related to the Edart acquisition are $14.7 million and $4.3 million, respectively. The combined network operates under the Ryder name, complementing our Fleet Management Solutions (FMS) business segment market coverage in the Northeast. We also acquired approximately 525 vehicles for remarketing, the majority of which have been sold.

During the first quarter of 2010 and 2009, we paid $0.3 million and $4.2 million, respectively, related to other acquisitions completed in prior years.

(D) DISCONTINUED OPERATIONS

In 2009, we ceased Supply Chain Solutions (SCS) service operations in Brazil, Argentina, Chile and European markets. Accordingly, results of these operations, financial position and cash flows are separately reported as discontinued operations for all periods presented either in the Consolidated Condensed Financial Statements or notes thereto.

Summarized results of discontinued operations were as follows:


	Three months ended March 31,
	2010			2009
	(In thousands)

Total revenue	$	111			29,043


Pre-tax loss from discontinued operations	$	(505	)		(4,280	)
Income tax benefit		6			178

Loss from discontinued operations, net of tax	$	(499	)		(4,102	)

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

Loss from discontinued operations in the first quarter of 2010 and 2009 included $0.3 million and $3.0 million, respectively, of operating losses.

During the first quarter of 2010, we also incurred $0.2 million of exit-related restructuring and other charges related to discontinued operations. These charges included $0.1 million of employee severance and retention bonuses and $0.1 million of lease contract termination charges. During the first quarter of 2009, we incurred $1.3 million of exit-related restructuring and other charges related to discontinued operations. These charges included $0.6 million of employee severance and retention bonuses, $0.3 million of lease contract termination charges, $0.6 million of restructuring plan implementation costs, mostly professional service fees, offset by a receivable recovery of $0.2 million.

The following is a summary of assets and liabilities of discontinued operations:


	March 31,		December 31,
	2010		2009
	(In thousands)
Assets:
Total current assets	$	4,994	$	3,671
Total assets	$	9,113	$	7,631

Liabilities:
Total current liabilities	$	6,511	$	7,713
Total liabilities	$	11,448	$	12,869

(E) SHARE-BASED COMPENSATION PLANS

Share-based incentive awards are provided to employees under the terms of various share-based compensation plans (collectively, the “Plans”). The Plans are administered by the Compensation Committee of the Board of Directors. Awards under the Plans principally include at-the-money stock options, nonvested stock and cash awards. Share-based compensation expense is generally recorded in “Salaries and employee-related costs” in the Consolidated Condensed Statements of Earnings.

The following table provides information on share-based compensation expense and income tax benefits recognized during the periods:


	Three months ended March 31,
	2010			2009
	(In thousands)

Stock option and stock purchase plans	$	2,253			2,813
Nonvested stock		1,688			1,958

Share-based compensation expense		3,941			4,771
Income tax benefit		(1,326	)		(1,519	)

Share-based compensation expense, net of tax	$	2,615			3,252

Total unrecognized pre-tax compensation expense related to share-based compensation arrangements at March 31, 2010 was $33.2 million and is expected to be recognized over a weighted-average period of approximately 2.1 years.

During each of the three months ended March 31, 2010 and 2009, approximately 900,000 stock options were granted under the Plans. These awards, which generally vest one-third each year from the date of grant, are fully vested three years from the grant date and have contractual terms of seven years. The fair value of each option award at the date of grant was estimated using a Black-Scholes-Merton option-pricing valuation model. The weighted-average fair value per option granted during the three months ended March 31, 2010 and 2009 was $8.93 and $9.24, respectively.

During each of the three months ended March 31, 2010 and 2009, approximately 200,000 awards of restricted stock rights were granted under the Plans. The majority of the restricted stock rights granted during the periods included a market-based vesting provision. Employees only receive the grant of stock if Ryder’s cumulative average total shareholder return (TSR) at least meets the S&P 500 cumulative average TSR over an applicable three-year period. The fair value of the market-based restricted stock rights on

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

the grant date was estimated using a lattice-based option-pricing valuation model that incorporates a Monte-Carlo simulation. The fair value of the time-vested awards is determined and fixed on the grant date based on Ryder’s stock price on the date of grant. The weighted-average fair value per restricted stock right granted during the three months ended March 31, 2010 and 2009 was $17.31 and $16.52, respectively.

During the three months ended March 31, 2010 and 2009, employees who received market-based restricted stock rights also received market-based cash awards. The awards have the same vesting provisions as the market-based restricted stock rights except that Ryder’s TSR must at least meet the TSR of the 33rd percentile of the S&P 500. The cash awards are accounted for as liability awards as the cash settlement is based upon the performance of our common stock. As a result, the liability is adjusted to reflect fair value at the end of each reporting period. The fair value of the cash awards was estimated using a lattice-based option-pricing valuation model that incorporates a Monte-Carlo simulation. During the three months ended March 31, 2010 and 2009, we recognized $0.1 million and $0.3 million, respectively, of compensation expense related to these cash awards in addition to the share-based compensation expense reported in the previous table.

(F) EARNINGS PER SHARE

We compute earnings per share using the two-class method. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period.

The following table presents the calculation of basic and diluted earnings per common share from continuing operations:


	Three months ended March 31,
	2010			2009
	(In thousands, except per
	share amounts)
Earnings per share — Basic:
Earnings from continuing operations	$	12,872			10,940
Less: Distributed and undistributed earnings allocated to nonvested stock		(172	)		(136	)

Earnings from continuing operations available to common shareholders — Basic	$	12,700			10,804


Weighted average common shares outstanding— Basic		52,679			55,238


Earnings from continuing operations per common share — Basic	$	0.24			0.20


Earnings per share — Diluted:
Earnings from continuing operations	$	12,872			10,940
Less: Distributed and undistributed earnings allocated to nonvested stock		(172	)		(136	)

Earnings from continuing operations available to common shareholders — Diluted	$	12,700			10,804


Weighted average common shares outstanding— Basic		52,679			55,238
Effect of dilutive options		23			43

Weighted average common shares outstanding— Diluted		52,702			55,281


Earnings from continuing operations per common share — Diluted	$	0.24			0.20


Anti-dilutive equity awards not included above		2,315			2,651

(G) RESTRUCTURING AND OTHER CHARGES

Restructuring charges, net of $2.8 million for the three months ended March 31, 2009 represented employee severance and benefit costs related to workforce reductions and refinements in previous workforce reduction estimates.

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

As noted in Note (T), “Segment Reporting,” our primary measure of segment financial performance excludes, among other items, restructuring and other charges, net; however, the applicable portion of the restructuring and other charges, net that relates to each segment was as follows:


	Three months ended March 31,
	2010		2009
	(In thousands)

Fleet Management Solutions	$	—		1,651
Supply Chain Solutions		—		925
Dedicated Contract Carriage		—		46
Central Support Services		—		130

Total	$	—		2,752

Activity related to restructuring reserves including discontinued operations were as follows:

Deductions

Foreign

December 31, 2009

Cash

Non-Cash

Translation

March 31, 2010

Balance

Additions

Payments

Reductions⁽¹⁾

Adjustment

Balance

(In thousands)

Employee severance and benefits

1,070

107

399

)

745

Contract termination costs

172

175

—

)

Total

1,242

182

574

(12

)

809


(1)		Non-cash reductions represent adjustments to the restructuring reserves as actual costs were less than originally estimated.

At March 31, 2010, the majority of outstanding restructuring obligations are required to be paid over the next three months.

(H) REVENUE EARNING EQUIPMENT


	March 31, 2010							December 31, 2009
			Accumulated			Net Book				Accumulated			Net Book
	Cost		Depreciation			Value ⁽¹⁾		Cost		Depreciation			Value ⁽¹⁾
	(In thousands)
Held for use:
Full service lease	$	5,552,497		(2,211,150	)		3,341,347	$	5,616,102		(2,173,693	)		3,442,409
Commercial rental		1,348,387		(587,902	)		760,485		1,235,404		(577,839	)		657,565
Held for sale		344,216		(261,210	)		83,006		340,332		(261,647	)		78,685

Total	$	7,245,100		(3,060,262	)		4,184,838	$	7,191,838		(3,013,179	)		4,178,659


(1)		Revenue earning equipment, net includes vehicles acquired under capital leases of $19.6 million, less accumulated amortization of $7.1 million, at March 31, 2010, and $19.9 million, less accumulated amortization of $6.9 million, at December 31, 2009. Amortization expense attributed to vehicles acquired under capital leases is combined with depreciation expense.

At the end of 2009, we completed our annual review of residual values and useful lives of revenue earning equipment. Based on the results of our analysis, we adjusted the residual values of certain classes of revenue earning equipment effective January 1, 2010. The change in estimated residual values decreased pre-tax earnings for the three months ended March 31, 2010 by approximately $3.5 million or $0.04 per diluted common share, compared with the same period in 2009. In addition, we recognized $2.5 million of accelerated depreciation for select vehicles that are expected to be sold by the end of the year.

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

(I) GOODWILL

The carrying amount of goodwill attributable to each reportable business segment with changes therein was as follows:


	Fleet			Supply			Dedicated
	Management			Chain			Contract
	Solutions			Solutions			Carriage		Total
	(In thousands)
Balance at January 1, 2010:
Goodwill	$	206,085			34,680			4,900		245,665
Accumulated impairment losses		(10,322	)		(18,899	)		¾		(29,221	)

		195,763			15,781			4,900		216,444
Acquisitions		25			—			—		25
Foreign currency translation adjustment		359			157			—		516

Balance at March 31, 2010:
Goodwill		206,469			34,837			4,900		246,206
Accumulated impairment losses		(10,322	)		(18,899	)		—		(29,221	)

	$	196,147			15,938			4,900		216,985

(J) ACCRUED EXPENSES AND OTHER LIABILITIES


	March 31, 2010						December 31, 2009
	Accrued		Non-Current				Accrued		Non-Current
	Expenses		Liabilities		Total		Expenses		Liabilities		Total
	(In thousands)

Salaries and wages	$	48,352		—		48,352	$	45,349		—		45,349
Deferred compensation		1,685		16,092		17,777		5,068		16,970		22,038
Pension benefits		2,710		333,661		336,371		2,695		328,571		331,266
Other postretirement benefits		3,216		47,267		50,483		3,214		46,115		49,329
Employee benefits		999		—		999		2,346		—		2,346
Insurance obligations, primarily self-insurance		106,248		142,631		248,879		111,144		151,045		262,189
Residual value guarantees		2,690		1,973		4,663		2,177		1,872		4,049
Vehicle rent		2,054		12,663		14,717		129		8,568		8,697
Deferred vehicle gains		780		2,048		2,828		790		2,259		3,049
Environmental liabilities		4,787		9,913		14,700		5,285		9,578		14,863
Asset retirement obligations		3,911		12,581		16,492		4,881		11,435		16,316
Operating taxes		73,636		—		73,636		70,370		—		70,370
Income taxes		31,197		74,812		106,009		459		73,311		73,770
Restructuring		693		116		809		1,114		128		1,242
Interest		33,904		—		33,904		29,123		—		29,123
Customer deposits		29,936		—		29,936		29,511		—		29,511
Other		37,890		27,245		65,135		41,290		31,761		73,051

Total	$	384,688		681,002		1,065,690	$	354,945		681,613		1,036,558

(K) INCOME TAXES

Uncertain Tax Positions

We are subject to tax audits in numerous jurisdictions in the U.S. and around the world. Tax audits by their very nature are often complex and can require several years to complete. In the normal course of business, we are subject to challenges from the Internal Revenue Service (IRS) and other tax authorities regarding amounts of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. As part of our calculation of the provision for income taxes on earnings, we determine whether the benefits of our tax positions are at least more likely than not of being sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not of being sustained upon audit, we accrue the largest amount of the benefit that is more likely than not of being sustained in our Consolidated Condensed Financial Statements.

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

Such accruals require management to make estimates and judgments with respect to the ultimate outcome of a tax audit. Actual results could vary materially from these estimates.

The following is a summary of tax years that are no longer subject to examination:

Federal — audits of our U.S. federal income tax returns are closed through fiscal year 2006. In the first quarter of 2009, the IRS completed their examination of our U.S. income tax returns for 2004 through 2006. The statute of limitations for 2006 expires on September 15, 2010.

State — for the majority of states, we are no longer subject to tax examinations by tax authorities for tax years before 2006.

Foreign — we are no longer subject to foreign tax examinations by tax authorities for tax years before 2001 in Canada and Brazil, 2003 in Mexico and 2007 in the U.K., which are our major foreign tax jurisdictions. In Brazil, we were assessed $14.9 million, including penalties and interest, related to the tax due on the sale of our outbound auto carriage business in 2001. We believe it is more likely than not that our tax position will ultimately be sustained and no amounts have been reserved for this matter.

At March 31, 2010 and December 31, 2009, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $70.4 million and $69.5 million, respectively. Unrecognized tax benefits related to federal, state and foreign tax positions may decrease by $2.0 million by March 31, 2011, if audits are completed or tax years close.

Like-Kind Exchange Program

We have a like-kind exchange program for certain of our revenue earning equipment operating in the U.S. Pursuant to the program, we dispose of vehicles and acquire replacement vehicles in a form whereby tax gains on disposal of eligible vehicles are deferred. To qualify for like-kind exchange treatment, we exchange, through a qualified intermediary, eligible vehicles being disposed of with vehicles being acquired allowing us to generally carryover the tax basis of the vehicles sold (“like-kind exchanges”). The program is expected to result in a material deferral of federal and state income taxes. As part of the program, the proceeds from the sale of eligible vehicles are restricted for the acquisition of replacement vehicles and other specified applications. Due to the structure utilized to facilitate the like-kind exchanges, the qualified intermediary that holds the proceeds from the sales of eligible vehicles and the entity that holds the vehicles to be acquired under the program are required to be consolidated in the accompanying Consolidated Condensed Financial Statements in accordance with U.S. GAAP. At March 31, 2010 and December 31, 2009, these consolidated entities had total assets, primarily revenue earning equipment, of $76.3 million and $28.5 million, respectively. At March 31, 2010 and December 31, 2009, these consolidated entities had total liabilities, primarily accounts payable, of $76.3 million and $28.5 million, respectively.

Tax Law Changes

On March 23, 2010, the U.S. enacted the Patient Protection and Affordable Care Act. On March 30, 2010, the U.S. enacted the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”). The Act will reduce certain tax benefits available to employers for providing prescription coverage to retirees among other tax law changes. We do not provide prescription coverage for our retirees, therefore the Act had no impact on our deferred income taxes or net earnings.

On February 19, 2009, the State of Wisconsin enacted changes to its tax system, which included mandatory unitary combined reporting. The impact of this change resulted in a favorable non-cash adjustment to deferred income taxes and increased net earnings for the first quarter of 2009 by $0.5 million, or $0.01 per diluted common share.

Effective Tax Rate

Our effective income tax rate from continuing operations for the first quarter of 2010 was 42.8% compared with 51.2% in the same period of the prior year. The prior year income tax rate was impacted by higher non-deductible foreign other charges.

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

(L) DEBT


	Weighted-Average
	Interest Rate
	March 31,			December 31,					March 31,			December 31,
	2010			2009			Maturities		2010			2009
									(In thousands)
Short-term debt and current portion of long-term debt:
Unsecured foreign obligations		8.02	%		6.98	%		2010	$	6,154		$	5,369
Current portion of long-term debt, including capital leases										200,757			227,248

Total short-term debt and current portion of long-term debt										206,911			232,617


Long-term debt:
U.S. commercial paper ⁽¹⁾		0.31	%		0.43	%		2012		139,972			191,934
Unsecured U.S. notes – Medium-term notes ⁽¹⁾		5.89	%		5.89	%		2010-2025		2,032,748			2,032,344
Unsecured U.S. obligations, principally bank term loans		1.55	%		1.45	%		2010-2013		106,350			132,150
Unsecured foreign obligations		5.20	%		5.22	%		2010-2012		113,884			112,782
Capital lease obligations		8.22	%		8.26	%		2010-2017		10,579			11,011

Total before fair market value adjustment										2,403,533			2,480,221
Fair market value adjustment on notes subject to hedging ⁽²⁾										14,128			12,101

										2,417,661			2,492,322
Current portion of long-term debt, including capital leases										(200,757	)		(227,248	)

Long-term debt										2,216,904			2,265,074

Total debt									$	2,423,815		$	2,497,691


(1)		We had unamortized original issue discounts of $11.3 million and $11.7 million at March 31, 2010 and December 31, 2009, respectively.

(2)		The notional amount of the executed interest rate swap designated as fair value hedges was $250 million at both March 31, 2010 and December 31, 2009.

We can borrow up to $875 million under a global revolving credit facility with a syndicate of thirteen lending institutions led by Bank of America N.A., Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Corporate Bank, Ltd., Royal Bank of Scotland Plc and Wells Fargo N.A. The global credit facility matures in April 2012 and is used primarily to finance working capital and provide support for the issuance of unsecured commercial paper in the U.S. and Canada. This facility can also be used to issue up to $75 million in letters of credit (there were no letters of credit outstanding against the facility at March 31, 2010). At our option, the interest rate on borrowings under the credit facility is based on LIBOR, prime, federal funds or local equivalent rates. The agreement provides for annual facility fees, which range from 22.5 basis points to 62.5 basis points, and is based on Ryder’s long-term credit ratings. The current annual facility fee is 37.5 basis points, which applies to the total facility size of $875 million. The credit facility contains no provisions limiting its availability in the event of a material adverse change to Ryder’s business operations; however, the credit facility does contain standard representations and warranties, events of default, cross-default provisions, and certain affirmative and negative covenants. In order to maintain availability of funding, we must maintain a ratio of debt to consolidated tangible net worth, of less than or equal to 300%. Tangible net worth, as defined in the credit facility, includes 50% of our deferred federal income tax liability and excludes the book value of our intangibles. The ratio at March 31, 2010 was 152%. At March 31, 2010, $733.7 million was available under the credit facility.

Our global revolving credit facility permits us to refinance short-term commercial paper obligations on a long-term basis. Settlement of short-term commercial paper obligations not expected to require the use of working capital are classified as long-term as we have both the intent and ability to refinance on a long-term basis. At March 31, 2010 and December 31, 2009, we classified $140.0 million and $191.9 million, respectively, of short-term commercial paper as long-term. During the first quarter of 2010, commercial paper balances decreased $52.0 million as we generated more than expected net cash flows from operating and investing activities.

We have a trade receivables purchase and sale program, pursuant to which we sell certain of our domestic trade accounts receivable to a bankruptcy remote, consolidated subsidiary of Ryder, that in turn may sell, on a revolving basis, an ownership interest in certain of these accounts receivable to a receivables conduit or committed purchasers. We use this program to provide additional liquidity to fund our operations, particularly when it is cost effective to do so. The costs under the program may vary based on changes in interest rates. The available proceeds that may be received under the program is limited to $175 million. If no event occurs which causes early termination, the 364-day program will expire on October 29, 2010. The program contains provisions restricting its availability in the event of a material adverse change to our business operations or the collectibility of the collateralized receivables.

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

At March 31, 2010 and December 31, 2009, no amounts were outstanding under the program. Sales of receivables under this program will be accounted for as secured borrowings based on our continuing involvement in the transferred assets.

On February 25, 2010, we filed an automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission. The registration is for an indeterminate number of securities and is effective for three years. Under this universal shelf registration statement, we have the capacity to offer and sell from time to time various types of securities, including common stock, preferred stock and debt securities, subject to market demand and ratings status.

At March 31, 2010 and December 31, 2009, we had letters of credit and surety bonds outstanding totaling $257.9 million and $262.7 million, respectively, which primarily guarantee the payment of insurance claims.

(M) FAIR VALUE MEASUREMENTS

The following tables present our assets and liabilities that are measured at fair value on a recurring basis and the levels of inputs used to measure fair value:

Fair Value Measurements

At March 31, 2010 Using

Balance Sheet Location

Level 1

Level 2

Level 3

Total

(In thousands)

Assets:

Investments held in Rabbi Trusts:

Cash and cash equivalents

4,232

—

4,232

U.S. equity mutual funds

6,713

—

6,713

Foreign equity mutual funds

2,097

—

2,097

Fixed income mutual funds

2,596

—

2,596

Investments held in Rabbi Trusts

DFL and other assets

15,638

—

15,638

Interest rate swap

DFL and other assets

—

14,128

—

14,128

Total assets at fair value

15,638

14,128

—

29,766


		Fair Value Measurements
		At December 31, 2009 Using
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
		(In thousands)
Assets:
Investments held in Rabbi Trusts	DFL and other assets	$	19,686		—		—		19,686
Interest rate swap	DFL and other assets		—		12,101		—		12,101

Total assets at fair value		$	19,686		12,101		—		31,787

The following is a description of the valuation methodologies used for these items, as well as the level of input used to measure fair value:

Investments held in Rabbi Trusts — The investments primarily include mutual funds that invest in equity and fixed income securities. Shares of mutual funds were valued based on quoted market prices, which represents the net asset value of the shares and were therefore classified within Level 1 of the fair value hierarchy.

Interest rate swap — The derivative is a pay-variable, receive-fixed interest rate swap based on the LIBOR rate and is designated as a fair value hedge. Fair value was based on a model-driven income approach using the LIBOR rate at each interest payment date, which was observable at commonly quoted intervals for the full term of the swap. Therefore, our interest rate swap was classified within Level 2 of the fair value hierarchy.

The following tables present our assets and liabilities that are measured at fair value on a nonrecurring basis and the levels of inputs used to measure fair value:

Fair Value Measurements

Total Losses ⁽¹⁾

For the Three Months Ended March 31, 2010 Using

Three months

Level 1

Level 2

Level 3

ended

(In thousands)

Assets:

Revenue earning equipment held for sale:

Trucks

—

16,304

4,369

Tractors

—

23,383

3,810

Trailers

—

2,548

1,551

—

42,235

9,730

Operating property and equipment held for sale

—

8,792

—

Total assets at fair value

—

51,027

9,730

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)


	Fair Value Measurements						Total Losses ⁽¹⁾
	For the Three Months Ended March 31, 2009 Using						Three months
	Level 1		Level 2		Level 3		ended
	(In thousands)
Assets:
Revenue earning equipment held for sale	$	—		—		43,267	$	14,720
Operating property and equipment held for sale		—		—		10,590		3,924

Total assets at fair value	$	—		—		53,857	$	18,644


(1)		Total losses represent fair value adjustments for all vehicles held for sale throughout the period for which fair value was less than carrying value.

Revenue earning equipment held for sale is stated at the lower of carrying amount or fair value less costs to sell. For revenue earning equipment held for sale, we stratify our fleet by vehicle type (tractors, trucks, trailers), weight class, age and other relevant characteristics and create classes of similar assets for analysis purposes. Fair value was determined based upon recent market prices obtained from our own sales experience for sales of each class of similar assets and vehicle condition. Therefore, our revenue earning equipment held for sale was classified within Level 3 of the fair value hierarchy. At March 31, 2010, the net carrying value of revenue earning equipment held for sale was $83.0 million, of which $42.2 million was recorded at fair value less costs to sell of $0.6 million. At March 31, 2009, the net carrying value of revenue earning equipment held for sale was $102.6 million, of which $43.3 million was recorded at fair value less costs to sell of $0.8 million. During the first quarter of 2010 and 2009, we recorded a loss to reflect changes in fair value of $9.7 million and $14.7 million, respectively, within “Depreciation expense” in the Consolidated Condensed Statements of Earnings.

Operating property and equipment held for sale represents a SCS facility in Singapore. Fair value was based on an appraisal of the facility determined using observable market data and adjusted for recent offers. Therefore, our operating property and equipment held for sale was classified within Level 3 of the fair value hierarchy.

Total fair value of debt at March 31, 2010 and December 31, 2009 was approximately $2.51 billion and $2.60 billion, respectively. For publicly-traded debt, estimates of fair value are based on market prices. For other debt, fair value is estimated based on rates currently available to us for debt with similar terms and remaining maturities. The carrying amounts reported in the Consolidated Condensed Balance Sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturities of these financial instruments.

(N) DERIVATIVES

In February 2008, we issued $250 million of unsecured medium-term notes maturing in March 2013. Concurrently, we entered into an interest rate swap with a notional amount of $250 million maturing in March 2013. The swap was designated as a fair value hedge whereby we receive fixed interest rate payments in exchange for making variable interest rate payments. The differential to be paid or received is accrued and recognized as interest expense. At March 31, 2010, the interest rate swap agreement effectively changed $250 million of fixed-rate debt with an interest rate of 6.00% to LIBOR-based floating-rate debt at a rate of 2.52%. Changes in the fair value of the interest rate swap are offset by changes in the fair value of the debt instrument. Accordingly, there is no ineffectiveness related to the interest rate swap. Our swap agreement contains provisions that would require us to post collateral in the event that the swap is in a liability position exceeding certain thresholds based on our credit ratings.

The location and amount of gains (losses) on derivative instruments and related hedged items reported in the Consolidated Condensed Statements of Earnings were as follows:


	Location of Gain (Loss)	Three months ended March 31,
Fair Value Hedging Relationship	Recognized in Income	2010			2009
		(In thousands)

Derivative: Interest rate swap	Interest expense	$	2,027			(1,272	)
Hedged item: Fixed-rate debt	Interest expense		(2,027	)		1,272

Total		$	—			—

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

Refer to Note (M), “Fair Value Measurements,” for disclosures of the fair value and line item caption of derivative instruments recorded on the Consolidated Condensed Balance Sheets.

(O) SHARE REPURCHASE PROGRAMS

In February 2010, our Board of Directors authorized a $100 million discretionary share repurchase program over a period not to exceed two years. Share repurchases of common stock under this plan may be made periodically in open-market transactions and are subject to market conditions, legal requirements and other factors. Management has established a prearranged written plan for the Company under Rule 10b5-1 of the Securities Exchange Act of 1934 as part of the February 2010 program, which allows for share repurchases during Ryder’s quarterly blackout periods as set forth in the plan. For the three months ended March 31, 2010, we repurchased and retired 550,000 shares under this program at an aggregate cost of $19.3 million.

In December 2009, our Board of Directors authorized a share repurchase program intended to mitigate the dilutive impact of shares issued under our various employee stock, stock option and employee stock purchase plans. Under the December 2009 program, management is authorized to repurchase shares of common stock in an amount not to exceed the number of shares issued to employees under the Company’s various employee stock, stock option and employee stock purchase plans from December 1, 2009 through December 15, 2011. The December 2009 program limits aggregate share repurchases to no more than 2 million shares of Ryder common stock. Share repurchases of common stock are made periodically in open-market transactions and are subject to market conditions, legal requirements and other factors. Management may establish a prearranged written plan for the Company under Rule 10b5-1 of the Securities Exchange Act of 1934 as part of the December 2009 program, which allows for share repurchases during Ryder’s quarterly blackout periods as set forth in the plan. For the three months ended March 31, 2010, we repurchased and retired 169,599 shares under this program at an aggregate cost of $5.8 million.

(P) COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) presents a measure of all changes in shareholders’ equity except for changes resulting from transactions with shareholders in their capacity as shareholders. Our total comprehensive income (loss) presently consists of net earnings, currency translation adjustments associated with foreign operations that use the local currency as their functional currency, adjustments for derivative instruments accounted for as cash flow hedges and various pension and other postretirement benefits related items.

The following table provides a reconciliation of net earnings as reported in the Consolidated Condensed Statements of Earnings to comprehensive income (loss):


	Three months ended March 31,
	2010			2009
	(In thousands)

Net earnings	$	12,373			6,838
Other comprehensive income (loss):
Foreign currency translation adjustments		(1,650	)		(20,877	)
Net unrealized gain on derivative instruments		—			143
Amortization of transition obligation ⁽¹⁾		(4	)		(4	)
Amortization of net actuarial loss ⁽¹⁾		3,157			4,119
Amortization of prior service credit ⁽¹⁾		(400	)		(372	)
Change in net actuarial loss ⁽¹⁾		(82	)		(144	)

Total comprehensive income (loss)	$	13,394			(10,297	)


(1)		Amounts pertain to our pension and/or postretirement benefit plans and are presented net of tax. See Note (Q), “Employee Benefit Plans,” for additional information.

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

(Q) EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost were as follows:


	Pension Benefits						Postretirement Benefits
	Three months ended March 31,
	2010			2009			2010			2009
	(In thousands)
Company-administered plans:
Service cost	$	5,089			5,204		$	426			385
Interest cost		24,097			23,080			765			741
Expected return on plan assets		(23,301	)		(18,441	)		—			—
Amortization of:
Transition obligation		(6	)		(6	)		—			—
Net actuarial loss		4,732			6,160			178			216
Prior service credit		(563	)		(528	)		(58	)		(58	)

		10,048			15,469			1,311			1,284
Union-administered plans		1,275			1,287			—			—

Net periodic benefit cost	$	11,323			16,756		$	1,311			1,284


Company-administered plans:
U.S.	$	8,816			13,027		$	941			1,024
Non-U.S.		1,232			2,442			370			260

		10,048			15,469			1,311			1,284
Union-administered plans		1,275			1,287			—			—

	$	11,323			16,756		$	1,311			1,284

Pension Contributions

We disclosed in our 2009 Annual Report that we estimated required contributions of approximately $17 million to our pension plans during 2010. During the first quarter of 2010, global contributions of $3.5 million had been made to our pension plans.

Enhanced Savings Plan

Employees who do not actively participate in our pension plans are eligible to participate in an enhanced savings plan. The enhanced savings plan provides for (i) a company contribution even if employees do not make contributions, (ii) a company match of employee contributions of eligible pay, and (iii) a discretionary company match based on our performance. During the first quarter of 2010 and 2009, we recognized total savings plan costs of $6.7 million and $6.1 million, respectively.

(R) OTHER ITEMS IMPACTING COMPARABILITY

Our primary measure of segment performance excludes certain items we do not believe are representative of the ongoing operations of the segment. We believe that excluding these items from our segment measure of performance allows for better comparison of results.

During the first quarter of 2009, we recognized a pre-tax impairment charge of $3.9 million to write-down a SCS Singapore facility to its estimated fair value. This charge was recorded within “Depreciation expense” in our Consolidated Condensed Statements of Earnings.

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

(S) SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information was as follows:


	Three months ended March 31,
	2010			2009
	(In thousands)

Interest paid	$	26,686		$	35,311
Income taxes (refunded) paid	$	(11,119	)	$	4,007
Changes in accounts payable related to purchases of revenue earning equipment	$	76,308		$	(27,347	)
Revenue earning equipment acquired under capital leases	$	—		$	1,949

(T) SEGMENT REPORTING

Our operating segments are aggregated into reportable business segments based upon similar economic characteristics, products, services, customers and delivery methods. We operate in three reportable business segments: (1) FMS, which provides full service leasing, contract maintenance, contract-related maintenance and commercial rental of trucks, tractors and trailers to customers, principally in the U.S., Canada and the U.K.; (2) SCS, which provides comprehensive supply chain consulting including distribution and transportation services in North America and Asia; and (3) Dedicated Contract Carriage (DCC), which provides vehicles and drivers as part of a dedicated transportation solution in the U.S.

Our primary measurement of segment financial performance, defined as “Net Before Taxes” (NBT), includes an allocation of Central Support Services (CSS) and excludes restructuring and other charges, net described in Note (G), “Restructuring and Other Charges,” and excludes the items discussed in Note (R), “Other Items Impacting Comparability.” CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services, public affairs, information technology, health and safety, legal and corporate communications. The objective of the NBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment and each operating segment within each business segment accountable for their allocated share of CSS costs. Certain costs are considered to be overhead not attributable to any segment and remain unallocated in CSS. Included among the unallocated overhead remaining within CSS are the costs for investor relations, public affairs and certain executive compensation.

Our FMS segment leases revenue earning equipment and provides fuel, maintenance and other ancillary services to the SCS and DCC segments. Inter-segment revenue and NBT are accounted for at rates similar to those executed with third parties. NBT related to inter-segment equipment and services billed to customers (equipment contribution) are included in both FMS and the business segment which served the customer and then eliminated (presented as “Eliminations”).

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

The following tables set forth financial information for each of our business segments and a reconciliation between segment NBT and earnings from continuing operations before income taxes for the three months ended March 31, 2010 and 2009. Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented.


	FMS		SCS		DCC		Eliminations			Total
	(In thousands)
For the three months ended March 31, 2010
Revenue from external customers	$	809,389		294,207		116,342		—			1,219,938
Inter-segment revenue		74,594		—		—		(74,594	)		—

Total revenue	$	883,983		294,207		116,342		(74,594	)		1,219,938


Segment NBT	$	21,695		7,025		7,386		(4,732	)		31,374

Unallocated CSS											(8,882	)

Earnings from continuing operations before income taxes										$	22,492


Segment capital expenditures ⁽¹⁾	$	195,488		1,501		612		—			197,601

Unallocated CSS											2,500

Capital expenditures paid										$	200,101


March 31, 2009
Revenue from external customers	$	792,077		267,293		115,026		—			1,174,396
Inter-segment revenue		71,458		—		—		(71,458	)		—

Total revenue	$	863,535		267,293		115,026		(71,458	)		1,174,396


Segment NBT	$	29,965		1,519		10,267		(5,644	)		36,107

Unallocated CSS											(7,000	)
Restructuring and other charges, net and other items ⁽²⁾											(6,676	)

Earnings from continuing operations before income taxes										$	22,431


Segment capital expenditures ^{(1), (3)}	$	247,048		2,824		210		—			250,082

Unallocated CSS											1,910

Capital expenditures paid										$	251,992


(1)		Excludes acquisition payments of $2.4 million and $85.5 million for the three months ended March 31, 2010 and 2009, respectively.

(2)		See Note (R), “Other Items Impacting Comparability,” for a discussion of items, in addition to restructuring and other charges, net that are excluded from our primary measure of segment performance.

(3)		Excludes revenue earning equipment acquired under capital leases.

(U) RECENT ACCOUNTING PRONOUNCEMENTS

In September 2009, the FASB issued accounting guidance which amends the criteria for allocating a contract’s consideration to individual services or products in multiple deliverable arrangements. The guidance requires that the best estimate of selling price be used when vendor specific objective or third-party evidence for deliverables cannot be determined. This guidance is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. We are in the process of evaluating the impact of this accounting guidance but do not expect it to have a material impact on our consolidated financial position, results of operations or cash flows.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS —
THREE MONTHS ENDED MARCH 31, 2010 AND 2009

OVERVIEW

The following discussion should be read in conjunction with the unaudited Consolidated Condensed Financial Statements and notes thereto included under Item 1. In addition, reference should be made to our audited Consolidated Financial Statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2009 Annual Report on Form 10-K.

Ryder System, Inc. (Ryder) is a global leader in transportation and supply chain management solutions. Our business is divided into three business 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 U.S., Canada and the U.K.; Supply Chain Solutions (SCS), which provides comprehensive supply chain consulting including distribution and transportation services in North America and Asia; and Dedicated Contract Carriage (DCC), which provides vehicles and drivers as part of a dedicated transportation solution in the U.S. We operate in highly competitive markets. Our customers select us based on numerous factors including service quality, price, technology and service offerings. As an alternative to using our services, customers may choose to provide these services for themselves, or may choose to obtain similar or alternative services from other third-party vendors. Our customer base includes enterprises operating in a variety of industries including automotive, electronics, transportation, grocery, lumber and wood products, food service, and home furnishing.

ITEMS AFFECTING COMPARABILITY BETWEEN PERIODS

Accounting Changes

See Note (B), “Accounting Changes,” for a discussion of the impact of changes in accounting guidance.

ACQUISITIONS

Edart Leasing LLC Acquisition — On February 2, 2009, we acquired the assets of Edart Leasing LLC (“Edart”), which included Edart’s fleet of approximately 1,600 vehicles and more than 340 contractual customers from Edart’s five locations in Connecticut for a purchase price of $85.2 million, of which $2.1 million and $81.3 million was paid during the three months ended March 31, 2010 and 2009, respectively. Goodwill and customer relationship intangibles related to the Edart acquisition are $14.7 million and $4.3 million, respectively. The combined network operates under the Ryder name, complementing our FMS business segment market coverage in the Northeast. We also acquired approximately 525 vehicles for remarketing, the majority of which have been sold.

CONSOLIDATED RESULTS


	Three months ended March 31,						Change
	2010			2009			2010/2009
	(In thousands)

Earnings from continuing operations before income taxes	$	22,492			22,431			—	%
Provision for income taxes		9,620			11,491			(16	)

Earnings from continuing operations		12,872			10,940			18
Loss from discontinued operations, net of tax		(499	)		(4,102	)		88

Net earnings	$	12,373			6,838			81	%


Earnings (loss) per common share — Diluted
Continuing operations	$	0.24			0.20			20	%
Discontinued operations		(0.01	)		(0.08	)		88

Net earnings	$	0.23			0.12			92	%


Weighted-average shares outstanding — Diluted		52,702			55,281			(5	)%

Earnings from continuing operations before income taxes (NBT) remained flat. Excluding restructuring and the prior year SCS Singapore impairment charge of $3.9 million, NBT decreased 23% in the first quarter of 2010 to $22.5 million and earnings decreased 23% to $12.9 million primarily due to lower full service lease results because of the cumulative impact of customer fleet downsizings and

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

increased maintenance costs due to fleet aging. This decrease was partially offset by stronger SCS results, improved used vehicle results and better commercial rental performance. Net earnings increased 81% in the first quarter of 2010 to $12.4 million or $0.23 per diluted common share. Net earnings in the first quarter of 2009 were negatively impacted by losses from discontinued operations from SCS South America and Europe of $4.1 million. See Note (G), “Restructuring and Other Charges” and Note (R), “Other Items Impacting Comparability,” for information regarding items excluded from 2009.

See “Operating Results by Business Segment” for a further discussion of operating results.


	Three months ended March 31,						Change
	2010			2009			2010/2009
	(In thousands)
Revenue:
Fleet Management Solutions	$	883,983			863,535			2	%
Supply Chain Solutions		294,207			267,293			10
Dedicated Contract Carriage		116,342			115,026			1
Eliminations		(74,594	)		(71,458	)		(4	)

Total	$	1,219,938			1,174,396			4	%


Operating revenue ⁽¹⁾	$	987,590			990,838			—	%


(1)		We use operating revenue, a non-GAAP financial measure, to evaluate the operating performance of our businesses and as a measure of sales activity. FMS 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 our customers for which we realize minimal changes in profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period of time as customer pricing for fuel services is established based on market fuel costs. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as subcontracted transportation is typically a pass-through to our customers. We realize minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also a primary internal operating metric used to measure segment performance. Refer to the section titled “Non-GAAP Financial Measures” for a reconciliation of total revenue to operating revenue.

Total revenue increased 4% in the first quarter of 2010 to $1.22 billion. Total revenue growth was due to higher fuel prices and favorable movements in foreign currency exchange rates partially offset by lower fuel volumes. Operating revenue remained relatively flat in the first quarter of 2010 as lower full service lease revenue was offset by a favorable foreign exchange impact. Total revenue and operating revenue in the first quarter of 2010 included a favorable foreign exchange impact of 2.2% and 2.3%, respectively, due primarily to the strengthening of the Canadian dollar.


	Three months ended March 31,				Change
	2010		2009		2010/2009
	(Dollars in thousands)

Operating expense (exclusive of items shown separately)	$	577,614		534,535		8	%
Percentage of revenue	47%		46%

Operating expense and operating expense as a percentage of revenue increased in 2010 primarily as a result of higher fuel costs. The increase in fuel costs was driven by an increase in fuel prices and partially offset by reduced gallons pumped at our facilities.

We retain a portion of the accident risk under vehicle liability and workers’ compensation insurance programs. Our self-insurance accruals are based on actuarially estimated, undiscounted cost of claims, which includes claims incurred but not reported. While we believe that our estimation processes are well designed, every estimation process is inherently subject to limitations. Fluctuations in the frequency or severity of accidents make it difficult to precisely predict the ultimate cost of claims. In recent years, our development has been favorable compared to historical selected loss development factors because of improved safety performance, payment patterns and settlement patterns; however, there is no assurance we will continue to have similar favorable development in the future. During the three months ended March 31, 2010 and 2009, we recorded a charge of $0.2 million and a benefit of $2.6 million, respectively, from development in estimated prior years’ self-insured loss reserves.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

Three months ended March 31,

Change

2010

2009

2010/2009

(Dollars in thousands)

Salaries and employee-related costs

$304,712

301,213

Percentage of revenue

25%

26%

Percentage of operating revenue

31%

30%

Salaries and employee-related costs increased 1% in the first quarter of 2010 to $304.7 million primarily due to changes in foreign currency exchange rates and accrued compensation costs. The increase in salaries and employee-related costs was partially offset by $4.9 million of lower retirement plans expense reflecting higher than expected return on pension assets in 2009 and the favorable impact from voluntary pension contributions made in the fourth quarter of 2009. Headcount, excluding discontinued operations, as of March 31, 2010 decreased 5% compared with the prior year.


	Three months ended March 31,				Change
	2010		2009		2010/2009
	(Dollars in thousands)

Subcontracted transportation	$	60,337		41,182		47	%
Percentage of revenue		5%		4%

Subcontracted transportation expense represents freight management costs on logistics contracts for which we purchase transportation from third parties. Subcontracted transportation expense is directly impacted by whether we are acting as an agent or principal in our transportation management contracts. To the extent that we are acting as a principal, revenue is reported on a gross basis and carriage costs to third parties are recorded as subcontracted transportation expense. The impact to net earnings is the same whether we are acting as an agent or principal in the arrangement. Subcontracted transportation expense increased 47% in the first quarter of 2010 to $60.3 million as a result of increased freight volumes particularly in the automotive industry.


	Three months ended March 31,						Change
	2010			2009			2010/2009
	(In thousands)

Depreciation expense	$	211,005			221,585			(5	)%
Gains on vehicle sales, net	$	(4,518	)		(3,403	)		33	%
Equipment rental	$	16,455			15,339			7	%

Depreciation expense relates primarily to FMS revenue earning equipment. Revenue earning equipment held for sale is recorded at the lower of fair value less costs to sell or carrying value. Depreciation expense decreased 5% in the first quarter of 2010 to $211.0 million because of decreased write-downs in the carrying value of vehicles held for sale of $5.0 million, a prior year SCS Singapore facility impairment charge of $3.9 million and a reduced number of owned vehicles. The decrease in depreciation expense was partially offset by the impact of foreign exchange and $6.0 million related to both changes in residual values of certain classes of our revenue earning equipment effective January 1, 2010, as well as, accelerated depreciation for select vehicles that are expected to be sold by the end of the year.

Gains on vehicle sales, net increased 33% in the first quarter of 2010 to $4.5 million due to higher pricing, primarily in our used truck class and an increase in the number of vehicles sold.

Equipment rental consists primarily of rent expense for FMS revenue earning equipment under lease. Equipment rental increased 7% in the first quarter of 2010 to $16.5 million due to higher rental costs associated with investments in material handling equipment to support our SCS operations and changes in foreign exchange rates.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)


	Three months ended March 31,				Change
	2010		2009		2010/2009
	(Dollars in thousands)

Interest expense	$	33,336		38,137		(13	)%
Effective interest rate		5.4%		5.4%

Interest expense decreased 13% in the first quarter of 2010 to $33.3 million because of lower average debt balances.

Miscellaneous (income) expense, net consists of investment (income) losses on securities used to fund certain benefit plans, interest income, (gains) losses from sales of operating property, foreign currency transaction (gains) losses, and other non-operating items. Miscellaneous (income) expense, net improved $2.1 million in the first quarter of 2010 primarily due to better performance in our investment securities used to fund benefit plans.


	Three months ended March 31,
	2010		2009
	(In thousands)

Restructuring and other charges, net	$	—		2,752

Refer to Note (G), “Restructuring and Other Charges,” for a discussion of the restructuring and other charges recorded during the first quarter of 2009.


	Three months ended March 31,				Change
	2010		2009		2010/2009
	(Dollars in thousands)

Provision for income taxes	$	9,620		11,491		(16	)%
Effective tax rate from continuing operations		42.8%		51.2%

Our effective income tax rate from continuing operations for the first quarter of 2010 was 42.8% compared with 51.2% in the same period in the prior year. The prior year income tax rate was impacted by higher non-deductible foreign charges.


	Three months ended March 31,
	2010			2009
	(In thousands)

Loss from discontinued operations, net of tax	$	(499	)		(4,102	)

Loss from discontinued operations in the first quarter of 2010 and 2009 includes $0.3 million and $3.0 million, respectively, of operating losses and $0.2 million and $1.3 million, respectively, of exit-related restructuring and other items incurred in the wind down of our SCS South America and European operations. Refer to Note (D), “Discontinued Operations,” for a further discussion of discontinued operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

OPERATING RESULTS BY BUSINESS SEGMENT


	Three months ended March 31,							Change
	2010			2009				2010/2009
	(In thousands)
Revenue:
Fleet Management Solutions	$	883,983			863,535			2	%
Supply Chain Solutions		294,207			267,293			10
Dedicated Contract Carriage		116,342			115,026			1
Eliminations		(74,594	)		(71,458	)		(4	)

Total	$	1,219,938			1,174,396			4	%


Operating Revenue:
Fleet Management Solutions	$	677,410			693,217			(2	)%
Supply Chain Solutions		238,201			228,401			4
Dedicated Contract Carriage		112,011			112,736			(1	)
Eliminations		(40,032	)		(43,516	)		8

Total	$	987,590			990,838			—	%


NBT:
Fleet Management Solutions	$	21,695			29,965			(28	)%
Supply Chain Solutions		7,025			1,519			362
Dedicated Contract Carriage		7,386			10,267			(28	)
Eliminations		(4,732	)		(5,644	)		16

		31,374			36,107			(13	)
Unallocated Central Support Services		(8,882	)		(7,000	)		(27	)
Restructuring and other charges, net and other items		—			(6,676	)	NM

Earnings from continuing operations before income taxes	$	22,492			22,431			—	%

As part of management’s evaluation of segment operating performance, we define the primary measurement of our segment financial performance as “Net Before Taxes” (NBT) from continuing operations, which includes an allocation of Central Support Services (CSS), excludes restructuring and other charges, net, described in Note (G), “Restructuring and Other Charges,” and excludes the items discussed in Note (R), “Other Items Impacting Comparability” in the Notes to Consolidated Condensed Financial Statements. CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services and public affairs, information technology, health and safety, legal and corporate communications. The objective of the NBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment and each operating segment within each business segment accountable for their allocated share of CSS costs. Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Certain costs are considered to be overhead not attributable to any segment and remain unallocated in CSS. Included within the unallocated overhead remaining within CSS are the costs for investor relations, public affairs and certain executive compensation.

The following table provides a reconciliation of items excluded from our segment NBT measure to their classification within our Consolidated Condensed Statements of Earnings:


	Consolidated
	Condensed Statements of Earnings	Three months ended March 31,
Description	Line Item	2010		2009
		(In thousands)

Restructuring and other charges, net	Restructuring⁽¹⁾	$	—		(2,752	)
International asset impairment ⁽²⁾	Depreciation expense		—		(3,924	)

Restructuring and other charges, net and other items		$	—		(6,676	)


(1)		Restructuring refers to “Restructuring and other charges, net” on our Consolidated Condensed Statements of Earnings.

(2)		See Note (R), “Other Items Impacting Comparability,” for additional information.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

Our FMS segment leases revenue earning equipment and provides fuel, maintenance and other ancillary services to our SCS and DCC segments. Inter-segment revenue and NBT are accounted for at rates similar to those executed with third parties. NBT related to inter-segment equipment and services billed to customers (equipment contribution) are included in both FMS and the business segment which served the customer and then eliminated (presented as “Eliminations”).

The following table sets forth equipment contribution included in NBT for our SCS and DCC business segments:


	Three months ended March 31,				Change
	2010		2009		2010/2009
	(Dollars in thousands)
Equipment contribution:
Supply Chain Solutions	$	2,004		2,637	(24	)%
Dedicated Contract Carriage		2,728		3,007	(9	)

Total	$	4,732		5,644	(16	)%

Fleet Management Solutions


	Three months ended March 31,							Change
	2010			2009				2010/2009
	(Dollars in thousands)

Full service lease	$	479,423			491,560			(2	)%
Contract maintenance		39,765			41,388			(4	)

Contractual revenue		519,188			532,948			(3	)
Contract-related maintenance		40,218			44,993			(11	)
Commercial rental		101,558			99,201			2
Other		16,446			16,075			2

Operating revenue⁽¹⁾		677,410			693,217			(2	)
Fuel services revenue		206,573			170,318			21

Total revenue	$	883,983			863,535			2	%


Segment NBT	$	21,695			29,965			(28	)%


Segment NBT as a % of total revenue		2.5	%		3.5	%	(100		) bps


Segment NBT as a % of operating revenue⁽¹⁾		3.2	%		4.3	%	(110		) bps


(1)		We use operating revenue, a non-GAAP financial measure, to evaluate the operating performance of our 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 our operating revenue computation as fuel is largely a pass-through to customers for which we realize minimal changes in profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period of time as customer pricing for fuel services is established based on market fuel costs.

Total revenue increased 2% in the first quarter of 2010 to $884.0 million primarily due to higher fuel services revenue and favorable foreign exchange rate movements. Fuel services revenue increased 21% in 2010 due primarily to higher fuel prices, partially offset by lower fuel volumes. Operating revenue (revenue excluding fuel) decreased 2% in the first quarter of 2010 to $677.4 million primarily due to lower contractual revenue. Total revenue and operating revenue in the first quarter of 2010 included a favorable foreign exchange impact of 1.9% and 2.0%, respectively.

Full service lease revenue decreased 2% in the first quarter of 2010 to $479.4 million and contract maintenance revenue decreased 4% to $39.8 million reflecting the cumulative effect of ongoing customer fleet downsizing partially offset by favorable foreign exchange rate movements. We expect similar declines in contractual revenue comparisons in the near term based on recent sales activity. Commercial rental revenue increased 2% in the first quarter of 2010 to $101.6 million due to improving global market demand on a smaller fleet. In light of current economic conditions, we expect favorable commercial rental revenue comparisons to continue throughout the year driven by higher demand, improved utilization and somewhat higher pricing.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

The following table provides commercial rental statistics on our global fleet:


	Three months ended March 31,							Change
	2010			2009				2010/2009
	(Dollars in thousands)

Non-lease customer rental revenue	$	59,374			56,096			6	%


Lease customer rental revenue ⁽¹⁾	$	42,184			43,105			(2	)%


Average commercial rental power fleet size – in service ^{(2), (3)}		21,700			24,200			(10	)%


Commercial rental utilization – power fleet		68.6	%		60.8	%	780		bps


(1)		Lease customer rental revenue is revenue from rental vehicles provided to our existing full service lease customers, generally during peak periods in their operations.

(2)		Number of units rounded to nearest hundred and calculated using quarterly average unit counts.

(3)		Fleet size excluding trailers.

FMS NBT decreased 28% in the first quarter of 2010 to $21.7 million primarily due to lower full service lease performance as well as increased vehicle depreciation expense of $6.0 million resulting from residual value changes and accelerated depreciation. The decrease in NBT was partially offset by better used vehicle sales results, improved global commercial rental results and lower retirement plan costs. Full service lease results were adversely impacted by reduced customer demand for new leases, downsizing of customer fleets, and increased maintenance costs on a relatively older fleet. Used vehicle sales results were positively impacted by higher pricing, particularly in our used truck class and a lower average quarterly inventory level. Commercial rental performance improved as a result of increased market demand as well as fleet rightsizing actions taken in 2009. Retirement plan expense decreased $4.4 million in 2010 because of improved performance in the overall stock market in 2009.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

Our global fleet of owned and leased revenue earning equipment and contract maintenance vehicles is summarized as follows (number of units rounded to the nearest hundred):


							Change
	March 31,		December 31,		March 31,		Mar. 2010/			Mar. 2010/
	2010		2009		2009		Dec. 2009			Mar. 2009
End of period vehicle count

By type:
Trucks⁽¹⁾		63,600		63,600		69,000		—	%		(8	)%
Tractors⁽²⁾		50,200		50,300		52,700		—			(5	)
Trailers⁽³⁾		34,500		35,400		39,300		(3	)		(12	)
Other		3,000		3,100		3,300		(3	)		(9	)

Total		151,300		152,400		164,300		(1	)%		(8	)%


By ownership:
Owned		146,300		147,200		159,100		(1	)%		(8	)%
Leased		5,000		5,200		5,200		(4	)		(4	)

Total		151,300		152,400		164,300		(1	)%		(8	)%


By product line:
Full service lease		112,700		115,100		121,500		(2	)%		(7	)%
Commercial rental		28,800		27,400		30,500		5			(6	)
Service vehicles and other		3,000		3,000		2,800		—			7

Active units		144,500		145,500		154,800		(1	)		(7	)
Held for sale		6,800		6,900		9,500		(1	)		(28	)

Total		151,300		152,400		164,300		(1	)%		(8	)%


Customer vehicles under contract maintenance		33,900		34,400		36,400		(1	)%		(7	)%


Quarterly average vehicle count

By product line:
Full service lease		114,400		116,000		121,000		(1	)%		(5	)%
Commercial rental		27,800		27,800		31,500		—			(12	)
Service vehicles and other		2,900		2,900		2,800		—			4

Active units		145,100		146,700		155,300		(1	)		(7	)
Held for sale		6,900		7,300		8,800		(5	)		(22	)

Total		152,000		154,000		164,100		(1	)%		(7	)%


Customer vehicles under contract maintenance		34,100		34,300		36,100		(1	)%		(6	)%


(1)		Generally comprised of Class 1 through Class 6 type vehicles with a Gross Vehicle Weight (GVW) up to 26,000 pounds.

(2)		Generally comprised of over the road on highway tractors and are primarily comprised of Classes 7 and 8 type vehicles with a GVW of over 26,000 pounds.

(3)		Generally comprised of dry, flatbed and refrigerated type trailers.

(4)		Amounts were computed using a 6-point average based on monthly information.

Note: Prior year vehicle counts have been reclassified to conform to current year presentation.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

The following table provides a breakdown of our non-revenue earning equipment included in our global fleet count (number of units rounded to nearest hundred):


							Change
	March 31,		December 31,		March 31,		Mar. 2010/			Mar. 2010/
	2010		2009		2009		Dec. 2009			Mar. 2009
Not yet earning revenue (NYE)		1,400		700		1,100		100	%		27	%
No longer earning revenue (NLE):
Units held for sale		6,800		6,900		9,500		(1	)		(28	)
Other NLE units		3,000		2,900		4,500		3			(33	)

Total		11,200		10,500		15,100		7	%		(26	)%

NYE units represent new vehicles on hand that are being prepared for deployment to a lease customer or into the rental fleet. Preparations include activities such as adding lift gates, paint, decals, cargo area and refrigeration equipment. For 2010, the number of NYE units increased consistent with the refresh of the rental fleet. NLE units represent vehicles held for sale and vehicles for which no revenue has been earned in the previous 30 days. For 2010, the number of NLE units decreased because of lower used vehicle inventory levels and higher rental utilization. We expect similar NLE levels throughout the year.

Supply Chain Solutions


	Three months ended March 31,							Change
	2010			2009				2010/2009
	(Dollars in thousands)
U.S. operating revenue:
Automotive	$	84,747			79,071			7	%
High-Tech and Consumer		57,428			62,274			(8	)
Industrial and Other		29,155			31,019			(6	)

U.S. operating revenue		171,330			172,364			(1	)
International operating revenue		66,871			56,037			19

Total operating revenue ⁽¹⁾		238,201			228,401			4
Subcontracted transportation		56,006			38,892			44

Total revenue	$	294,207			267,293			10	%


Segment NBT	$	7,025			1,519			362	%


Segment NBT as a % of total revenue		2.4	%		0.6	%	180		bps


Segment NBT as a % of total operating revenue ⁽¹⁾		2.9	%		0.7	%	220		bps


Memo: Fuel costs ⁽²⁾	$	18,495			14,320			29	%


(1)		We use 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 typically a pass-through to customers. We realize minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also a primary internal operating metric and is used to measure segment performance.

(2)		Fuel costs are largely a pass-through to customers and therefore have a direct impact on revenue.

Total revenue increased 10% in the first quarter of 2010 to $294.2 million and operating revenue increased 4% to $238.2 million as a result of favorable foreign exchange rate movements. Total and operating revenue also benefited from improved automotive volumes partially offset by prior year customer account rationalizations. In the first quarter of 2010, SCS total revenue and operating revenue included a favorable foreign currency exchange impact of 4.4% and 4.1%, respectively. We do not expect these favorable revenue comparisons to continue in the near term because the current quarter benefited from favorable prior year comparisons and the longer-term impact from non-renewed contracts.

SCS NBT increased $5.5 million in the first quarter of 2010 to $7.0 million. The increase in NBT was primarily due to improved automotive production volumes.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

Dedicated Contract Carriage


	Three months ended March 31,							Change
	2010			2009				2010/2009
	(Dollars in thousands)

Operating revenue ⁽¹⁾	$	112,011			112,736			(1	)%
Subcontracted transportation		4,331			2,290			89

Total revenue	$	116,342			115,026			1	%


Segment NBT	$	7,386			10,267			(28	)%


Segment NBT as a % of total revenue		6.3	%		8.9	%	(260		)bps


Segment NBT as a % of operating revenue ⁽¹⁾		6.6	%		9.1	%	(250		)bps


Memo: Fuel costs⁽²⁾	$	19,405			16,029			21	%


(1)		We use 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 typically a pass-through to customers. We realize minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also a primary internal operating metric and is used to measure segment performance.

(2)		Fuel costs are largely a pass-through to customers and therefore have a direct impact on revenue.

Total revenue increased 1% in the first quarter of 2010 to $116.3 million primarily due to higher fuel costs pass-throughs. Operating revenue decreased 1% in the first quarter of 2010 to $112.0 million primarily due to non-renewal of customer contracts partially offset by higher fuel cost pass-throughs. We expect similar revenue comparisons to continue in the near term.

DCC NBT decreased 28% in the first quarter of 2010 to $7.4 million due to increased safety and insurance costs. DCC NBT was also negatively impacted by accrued compensation expenses as well as costs associated with new technology initiatives.

Central Support Services


	Three months ended March 31,						Change
	2010			2009			2010/2009
	(In thousands)

Human resources	$	3,834			3,645			5	%
Finance		12,560			12,442			1
Corporate services and public affairs		2,920			2,838			3
Information technology		13,611			12,971			5
Health and safety		1,655			1,667			(1	)
Other		7,781			4,734			64

Total CSS		42,361			38,297			11
Allocation of CSS to business segments		(33,479	)		(31,297	)		(7	)

Unallocated CSS	$	8,882			7,000			27	%

Total CSS costs increased 11% in the first quarter of 2010 to $42.4 million primarily driven by higher spending for technology and professional services as well as accrued compensation expenses. Unallocated CSS costs increased 27% in the first quarter of 2010 to $8.9 million primarily due to higher professional services spending and accrued compensation expenses.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

FINANCIAL RESOURCES AND LIQUIDITY

Cash Flows

The following is a summary of our cash flows from operating, financing and investing activities from continuing operations:


	Three months ended March 31,
	2010			2009
	(In thousands)
Net cash provided by (used in):
Operating activities	$	271,495			268,325
Financing activities		(114,895	)		(20,671	)
Investing activities		(135,184	)		(258,834	)
Effect of exchange rate changes on cash		(1,696	)		(1,488	)

Net change in cash and cash equivalents	$	19,720			(12,668	)

A detail of the individual items contributing to the cash flow changes is included in the Consolidated Condensed Statements of Cash Flows.

Cash provided by operating activities from continuing operations was $271.5 million in the three months ended March 31, 2010 compared with $268.3 million in 2009 as improved working capital needs were offset by lower cash-based earnings. Cash used in financing activities from continuing operations in the three months ended March 31, 2010 increased to $114.9 million compared with $20.7 million in 2009 due to higher net debt repayments resulting from less borrowing needs to fund capital spending. Cash used in investing activities from continuing operations decreased to $135.2 million in the three months ended March 31, 2010 compared with $258.8 million in 2009 primarily due to lower acquisition-related payments and lower vehicle capital spending in 2010.

We refer to the sum of operating cash flows, proceeds from the sales of revenue earning equipment and operating property and equipment, collections on direct finance leases and other cash inflows from continuing operations as “total cash generated.” We refer to the net amount of cash generated from operating and investing activities (excluding changes in restricted cash and acquisitions) from continuing operations as “free cash flow.” Although total cash generated and free cash flow are non-GAAP financial measures, we consider them to be important measures of comparative operating performance. We also believe total cash generated to be an important measure of total cash inflows generated from our ongoing business activities. We believe free cash flow provides investors with an important perspective on the cash available for debt service and for shareholders after making capital investments required to support ongoing business operations. Our calculation of free cash flow may be different from the calculation used by other companies and therefore comparability may be limited.

The following table shows the sources of our free cash flow computation:


	Three months ended March 31,
	2010			2009
	(In thousands)

Net cash provided by operating activities from continuing operations	$	271,495			268,325
Sales of revenue earning equipment		48,433			45,151
Sales of operating property and equipment		526			785
Collections on direct finance leases		15,576			21,468

Total cash generated		336,030			335,729
Purchases of property and revenue earning equipment		(200,101	)		(251,992	)

Free cash flow	$	135,929			83,737

Free cash flow increased to $135.9 million in the three months ended March 31, 2010 compared with $83.7 million in 2009 primarily due to lower cash payments for vehicle spending. We anticipate free cash flow to be consistent with our previous forecast of approximately $250 million.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

The following table provides a summary of capital expenditures:


	Three months ended March 31,
	2010			2009
	(In thousands)
Revenue earning equipment: ⁽¹⁾
Full service lease	$	121,433			205,664
Commercial rental		142,219			3,786

		263,652			209,450
Operating property and equipment		12,757			15,195

Total capital expenditures		276,409			224,645
Changes in accounts payable related to purchases of revenue earning equipment		(76,308	)		27,347

Cash paid for purchases of property and revenue earning equipment	$	200,101			251,992


(1)		Capital expenditures exclude revenue earning equipment acquired under capital leases of $1.9 million during the three months ended March 31, 2009. No revenue earning equipment was acquired under capital leases for the three months ended March 31, 2010.

Capital expenditures (accrual basis) increased 23% in the first quarter of 2010 to $276.4 million principally as a result of increased commercial rental spending to refresh the rental fleet. The decline in full service lease capital expenditures reflects lower new and replacement lease spending, as customers continue to downsize their fleets in the current economic environment. Increased lease term extensions and redeployments of used equipment have also reduced the need for new vehicle purchases. We anticipate full-year 2010 accrual basis capital expenditures to be consistent with our previous forecast of $1.1 billion.

Financing and Other Funding Transactions

We utilize external capital primarily to support working capital needs and growth in our asset-based product lines. The variety of financing alternatives typically available to fund our capital needs include commercial paper, long-term and medium-term public and private debt, asset-backed securities, bank term loans, leasing arrangements and bank credit facilities. Our principal sources of financing are issuances of commercial paper and medium-term notes.

Our ability to access unsecured debt in the capital markets is linked to both our short-term and long-term debt ratings. These ratings are intended to provide guidance to investors in determining the credit risk associated with particular Ryder securities based on current information obtained by the rating agencies from us or from other sources. Lower ratings generally result in higher borrowing costs as well as reduced access to unsecured capital markets. A significant downgrade of our short-term debt ratings would impair our ability to issue commercial paper. As a result, we would have to rely on alternative funding sources. A significant downgrade would not affect our ability to borrow amounts under our revolving credit facility described below.

Our debt ratings at March 31, 2010 were as follows:

Short-term

Long-term

Outlook

Moody’s Investors Service

Baa1

Stable (reaffirmed February 2010)

Standard & Poor’s Ratings Services

BBB+

Negative (lowered January 2009)

Fitch Ratings

A -

Stable (reaffirmed March 2010)

We believe that our operating cash flow, together with our access to commercial paper markets and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future. However, there can be no assurance that unanticipated volatility and disruption in commercial paper markets would not impair our ability to access these markets on terms commercially acceptable to us or at all. If we cease to have access to commercial paper and other sources of unsecured borrowings, we would meet our liquidity needs by drawing upon contractually committed lending agreements as described below and/or by seeking other funding sources.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

borrowings under the credit facility is based on LIBOR, prime, federal funds or local equivalent rates. The agreement provides for annual facility fees, which range from 22.5 basis points to 62.5 basis points and is based on Ryder’s long-term credit ratings. The credit facility’s current annual facility fee is 37.5 basis points, which applies to the total facility size of $875 million. The credit facility contains no provisions limiting its availability in the event of a material adverse change to Ryder’s business operations; however, the credit facility does contain standard representations and warranties, events of default, cross-default provisions, and certain affirmative and negative covenants. In order to maintain availability of funding, we must maintain a ratio of debt to consolidated tangible net worth, of less than or equal to 300%. Tangible net worth, as defined in the credit facility, includes 50% of our deferred federal income tax liability and excludes the book value of our intangible assets. The ratio at March 31, 2010 was 152%. At March 31, 2010, $733.7 million was available under the credit facility.

We have a trade receivables purchase and sale program, pursuant to which we sell certain of our domestic trade accounts receivable to a bankruptcy remote, consolidated subsidiary of Ryder, that in turn may sell, on a revolving basis, an ownership interest in certain of these accounts receivable to a receivables conduit or committed purchasers. We use this program to provide additional liquidity to fund our operations, particularly when it is cost effective to do so. The costs under the program may vary based on changes in interest rates. The available proceeds amount that may be received under the program is limited to $175 million. If no event occurs which causes early termination, the 364-day program will expire on October 29, 2010. The program contains provisions restricting its availability in the event of a material adverse change to our business operations or the collectibility of the collateralized receivables. At March 31, 2010 and December 31, 2009, no amounts were outstanding under the program. Sales of receivables under this program will be accounted for as secured borrowings based on our continuing involvement in the transferred assets.

Historically, we have established asset-backed securitization programs whereby we sell beneficial interests in certain long-term vehicle leases and related vehicle residuals to a bankruptcy-remote special purpose entity that in turn transfers the beneficial interest to a special purpose securitization trust in exchange for cash. The securitization trust funds the cash requirement with the issuance of asset-backed securities, secured or otherwise collateralized by the beneficial interest in the long-term vehicle leases and the residual value of the vehicles. The securitization provides us with further liquidity and access to new capital markets based on market conditions. On June 18, 2008, Ryder Funding II LP, a special purpose bankruptcy-remote subsidiary wholly-owned by Ryder, filed a registration statement on Form S-3 with the Securities and Exchange Commission for the registration of $600 million in asset-backed notes. The registration statement became effective on November 6, 2008 and remains effective until November 6, 2011.

On February 25, 2010, Ryder filed an automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission. The registration is for an indeterminate number of securities and is effective for three years. Under this universal shelf registration statement, we have the capacity to offer and sell from time to time various types of securities, including common stock, preferred stock and debt securities, subject to market demand and ratings status.

At March 31, 2010, we had the following amounts available to fund operations under the aforementioned facilities:


	(in millions)
Global revolving credit facility	$	734
Trade receivables program	$	175

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

The following table shows the movements in our debt balance:


	Three months ended March 31,
	2010			2009
	(In thousands)

Debt balance at January 1	$	2,497,691			2,862,799


Cash-related changes in debt:
Net change in commercial paper borrowings		(52,000	)		266,089
Proceeds from issuance of other debt instruments		710			66
Retirement of medium-term notes and debentures		—			(173,000	)
Other debt repaid, including capital lease obligations		(27,381	)		(102,367	)
Net change from discontinued operations		1,034			(2,284	)

		(77,637	)		(11,496	)

Non-cash changes in debt:
Fair market value adjustment on notes subject to hedging		2,027			(1,272	)
Addition of capital lease obligations, including acquisitions		—			1,949
Changes in foreign currency exchange rates and other non-cash items		1,734			(4,592	)

Total changes in debt		(73,876	)		(15,411	)


Debt balance at March 31	$	2,423,815			2,847,388

In accordance with our funding philosophy, we attempt to match the aggregate average remaining re-pricing life of our debt with the aggregate average remaining re-pricing life of our assets. We utilize both fixed-rate and variable-rate debt to achieve this match and generally target a mix of 25% to 45% variable-rate debt as a percentage of total debt outstanding. The variable-rate portion of our total obligations (including notional value of swap agreements) was 24% and 26% at March 31, 2010 and December 31, 2009, respectively.

Ryder’s leverage ratios and a reconciliation of on-balance sheet debt to total obligations were as follows:

March 31,

% to

December 31,

% to

2010

Equity

2009

Equity

(Dollars in thousands)

On-balance sheet debt

2,423,815

172%

2,497,691

175%

Off-balance sheet debt—PV of minimum lease payments and guaranteed residual values under operating leases for vehicles⁽¹⁾

120,787

118,828

Total obligations

2,544,602

181%

2,616,519

183%


(1)		Present value (PV) does not reflect payments Ryder would be required to make if we terminated the related leases prior to the scheduled expiration dates.

On-balance sheet debt to equity consists of balance sheet debt divided by total equity. Total obligations to equity represents balance sheet debt plus the present value of minimum lease payments and guaranteed residual values under operating leases for vehicles, discounted based on our incremental borrowing rate at lease inception, all divided by total equity. Although total obligations is a non-GAAP financial measure, we believe that total obligations is useful as it provides a more complete analysis of our existing financial obligations and helps better assess our overall leverage position. Our leverage ratios at March 31, 2010 were consistent with our ratios at year end.

Off-Balance Sheet Arrangements

We periodically enter into sale-leaseback transactions in order to lower the total cost of funding our operations, to diversify our funding among different classes of investors and to diversify our funding among different types of funding instruments. These sale-leaseback transactions are often executed with third-party financial institutions. In general, these sale-leaseback transactions result in a reduction in revenue earning equipment and debt on the balance sheet, as proceeds from the sale of revenue earning equipment are primarily used to repay debt. Accordingly, sale-leaseback transactions will result in reduced depreciation and interest expense and increased equipment rental expense. These leases contain limited guarantees by us of the residual values of the leased vehicles (residual value guarantees) that are conditioned upon disposal of the

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

leased vehicles prior to the end of their lease term. The amount of future payments for residual value guarantees will depend on the market for used vehicles and the condition of the vehicles at time of disposal. We did not enter into any sale-leaseback transactions during the three months ended March 31, 2010 or 2009.

Pension Information

The funded status of our pension plans is dependent upon many factors, including returns on invested assets and the level of certain market interest rates. We review pension assumptions regularly and we may from time to time make voluntary contributions to our pension plans, which exceed the amounts required by statute. We disclosed in our 2009 Annual Report that we estimated contributions of approximately $17 million to our pension plans during 2010. During the three months ended March 31, 2010, we contributed $3.5 million to our pension plans. Changes in interest rates and the market value of the securities held by the plans during 2010 could materially change, positively or negatively, the funded status of the plans and affect the level of pension expense and required contributions in 2011 and beyond. See Note (Q), “Employee Benefit Plans,” in the Notes to Consolidated Condensed Financial Statements for additional information.

Share Repurchases and Cash Dividends

See Note (O), “Share Repurchase Programs,” in the Notes to Consolidated Condensed Financial Statements for a discussion of share repurchases.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note (U), “Recent Accounting Pronouncements,” in the Notes to Consolidated Condensed Financial Statements for a discussion of recent accounting pronouncements.

NON-GAAP FINANCIAL MEASURES

This Quarterly Report on Form 10-Q includes information extracted from consolidated condensed financial information but not required by generally accepted accounting principles (GAAP) to be presented in the financial statements. Certain of this information are considered “non-GAAP financial measures” as defined by SEC rules. Specifically, we refer to operating revenue, salaries and employee-related costs as a percentage of operating revenue, FMS operating revenue, FMS NBT as a % of operating revenue, SCS operating revenue, SCS NBT as a % of operating revenue, DCC operating revenue, DCC NBT as a % of operating revenue, total cash generated, free cash flow, total obligations and total obligations to equity. 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.

The following table provides a numerical reconciliation of total revenue to operating revenue which was not provided within the MD&A discussion:


	Three months ended March 31,
	2010			2009
	(In thousands)

Total revenue	$	1,219,938			1,174,396
FMS fuel services and SCS/DCC subcontracted transportation ⁽¹⁾		(266,910	)		(211,500	)
Fuel eliminations		34,562			27,942

Operating revenue	$	987,590			990,838


(1)		Includes intercompany fuel sales.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

FORWARD-LOOKING STATEMENTS

Forward-looking statements (within the meaning of the Federal Private Securities Litigation Reform Act of 1995) are statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends concerning matters that are not historical facts. These statements are often preceded by or include the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could,” “should” or similar expressions. This Quarterly Report on Form 10-Q contains forward-looking statements including, but not limited to, statements regarding:

•

our expectations as to anticipated revenue and earnings trends in each business segment and the future status of current trends in economic conditions, particularly reduced contractual lease demand and increased commercial rental demand;

•

our expectations regarding commercial rental pricing trends and fleet utilization;

•

our expectations of the long-term residual values of revenue earning equipment;

•

the number of NLE vehicles in inventory for the remainder of the year;

•

our expectations of free cash flow, operating cash flow and capital expenditures for 2010;

•

the adequacy of our accounting estimates and reserves for pension expense, depreciation and residual value guarantees, self-insurance reserves, goodwill impairment, accounting changes and income taxes;

•

the adequacy of our fair value estimates of employee incentive awards under our share-based compensation plans;

•

our ability to fund all of our operations for the foreseeable future through internally generated funds and outside funding sources;

•

the anticipated impact of foreign exchange rate movements;

•

the anticipated impact of fuel price fluctuations;

•

our expectations as to return on pension plan assets, future pension expense and estimated contributions;

•

our expectations regarding the completion and ultimate resolution of tax audits;

•

our expectations regarding the ultimate resolution of a disputed foreign tax assessment;

•

the anticipated deferral of tax gains on disposal of eligible revenue earning equipment pursuant to our vehicle like-kind exchange program;

•

our expectations regarding the effect of the adoption of recent accounting pronouncements;

•

our ability to access unsecured debt in the capital markets;

•

our expectations regarding the future use and availability of funding sources;

•

the impact of our decision to resume our share repurchase programs; and

•

the appropriateness of our long-term target leverage range and our expectations regarding meeting that range.

These statements, as well as other forward-looking statements contained in this Quarterly Report, are based on our current plans and expectations and are subject to risks, uncertainties and assumptions. We caution readers that certain important factors could cause actual results and events to differ significantly from those expressed in any forward-looking statements. These risk factors include, but are not limited to, the following:

•

Market Conditions:

Changes in general economic and financial conditions in the U.S. and worldwide leading to decreased demand for our services, lower profit margins, increased levels of bad debt and reduced access to credit

Unfavorable financial market conditions that would limit our ability to execute share repurchases

More significant decrease in freight demand which would more severely impact both our transactions and variable-based contractual business

	o		Changes in our customers’ operations, financial condition or business environment that may limit their need for, or ability to purchase, our services

	o		Changes in market conditions affecting the commercial rental market or the sale of used vehicles

	o		Volatility in automotive volumes and shifting customer demand in the automotive industry

	o		Less than anticipated growth rates in the markets in which we operate

	o		Changes in current financial, tax or regulatory requirements that could negatively impact the leasing market

•

Competition:

	o		Competition from other service providers, some of which have greater capital resources or lower capital costs

	o		Continued consolidation in the markets in which we operate which may create large competitors with greater financial resources

	o		Our inability to maintain current pricing levels due to economic conditions, demands for services, customer acceptance or competition

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

•

Profitability:

	o		Our inability to obtain adequate profit margins for our services

	o		Lower than expected customer volumes or retention levels

	o		Continuing lower full service lease sales

	o		Loss of key customers in our SCS and DCC business segments

	o		Our inability to adapt our product offerings to meet changing consumer preferences on a cost-effective basis

	o		The inability of our business segments to create operating efficiencies

	o		The inability of our legacy information technology systems to provide timely access to data

	o		Sudden changes in fuel prices and fuel shortages

	o		Higher prices for vehicles, diesel engines and fuel as a result of new exhaust emmisions standards

	o		Our inability to successfully implement our asset management initiatives

	o		Our key assumptions and pricing structure of our SCS contracts prove to be invalid

	o		Increased unionizing, labor strikes, work stoppages and driver shortages

	o		Our inability to manage our cost structure

	o		Our inability to limit our exposure for customer claims

•

Financing Concerns:

	o		Higher borrowing costs and possible decreases in available funding sources caused by an adverse change in our debt ratings

	o		Unanticipated interest rate and currency exchange rate fluctuations

	o		Negative funding status of our pension plans caused by lower than expected returns on invested assets and unanticipated changes in interest rates

	o		Increased instability in U.S. and worldwide credit markets, resulting in higher borrowing costs and/or reduced access to credit

•

Accounting Matters:

	o		Impact of unusual items resulting from ongoing evaluations of business strategies, asset valuations, acquisitions, divestitures and our organizational structure

	o		Reductions in residual values or useful lives of revenue earning equipment

	o		Increases in compensation levels, retirement rate and mortality resulting in higher pension expense; regulatory changes affecting pension estimates, accruals and expenses

	o		Increases in healthcare costs resulting in higher insurance costs

	o		Changes in accounting rules, assumptions and accruals

	o		Impact of actual insurance claim and settlement activity compared to historical loss development factors used to project future development

•

Other risks detailed from time to time in our SEC filings

The risks included here are not exhaustive. New risk factors 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 risk factors on our business. As a result, no assurance can be given as to our future results or achievements. You should not place undue reliance on the forward-looking statements contained herein, which speak only as of the date of this Quarterly Report. We do not intend, or assume any obligation, to update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to Ryder’s exposures to market risks since December 31, 2009. Please refer to the 2009 Annual Report on Form 10-K for a complete discussion of Ryder’s exposures to market risks.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the first quarter of 2010, we carried out an evaluation, under the supervision and with the participation of management, including Ryder’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Ryder’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the first quarter of 2010, Ryder’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective.

Changes in Internal Controls over Financial Reporting

During the three months ended March 31, 2010, there were no changes in Ryder’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect such internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to purchases we made of our common stock during the three months ended March 31, 2010:

Maximum

Approximate

Total Number of

Number of

Dollar Value

Shares

Shares That May

That

Purchased as

Yet Be

May Yet Be

Total Number

Part of Publicly

Purchased Under

of Shares

Average Price

Announced

the Anti-Dilutive

the Discretionary

Purchased ⁽¹⁾

Paid per Share

Program

Program⁽²⁾

Program ⁽³⁾

January 1 through January 31, 2010

5,300

40.38

—

2,000,000

—

February 1 through February 28, 2010

489,021

34.33

469,599

1,830,401

89,605,875

March 1 through March 31, 2010

250,000

35.63

250,000

1,830,401

80,698,415

Total

744,321

34.81

719,599


(1)		During the three months ended March 31, 2010, we purchased an aggregate of 24,722 shares of our common stock in employee-related transactions. Employee-related transactions may include: (i) shares of common stock delivered as payment for the exercise price of options exercised or to satisfy the option holders’ tax withholding liability associated with our share-based compensation programs and (ii) open-market purchases by the trustee of Ryder’s deferred compensation plans relating to investments by employees in our common stock, one of the investment options available under the plans.

(2)		In December 2009, our Board of Directors authorized a share repurchase program intended to mitigate the dilutive impact of shares issued under our various employee stock, stock option and employee stock purchase plans. Under the December 2009 program, management is authorized to repurchase shares of common stock in an amount not to exceed the number of shares issued to employees under our various employee stock, stock option and employee stock purchase plans from December 1, 2009 through December 15, 2011. The December 2009 program limits aggregate share repurchases to no more than 2 million shares of Ryder common stock. Share repurchases of common stock are made periodically in open-market transactions and are subject to market conditions, legal requirements and other factors. Management may establish a prearranged written plan for the Company under Rule 10b5-1 of the Securities Exchange Act of 1934 as part of the December 2009 program, which allows for share repurchases during Ryder’s quarterly blackout periods as set forth in the trading plan. For the three months ended March 31, 2010, we repurchased and retired 169,599 shares under this program at an aggregate cost of $5.8 million.

(3)		In February 2010, our Board of Directors authorized a $100 million discretionary share repurchase program over a period not to exceed two years. Share repurchases of common stock may be made periodically in open-market transactions and are subject to market conditions, legal requirements and other factors. Management has established a prearranged written plan for the Company under Rule 10b5-1 of the Securities Exchange Act of 1934 as part of the February 2010 program, which allows for share repurchases during Ryder’s quarterly blackout periods as set forth in the trading plan. For the three months ended March 31, 2010, we repurchased and retired 550,000 shares under this program at an aggregate cost of $19.3 million.

ITEM 6. EXHIBITS


31.1		Certification of Gregory T. Swienton pursuant to Rule 13a-14(a) or Rule 15d-14(a).

31.2		Certification of Robert E. Sanchez pursuant to Rule 13a-14(a) or Rule 15d-14(a).

32		Certification of Gregory T. Swienton and Robert E. Sanchez pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	RYDER SYSTEM, INC. (Registrant)
Date: April 21, 2010	By:	/s/ Robert E. Sanchez
		Robert E. Sanchez
		Executive Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)


Date: April 21, 2010	By:	/s/ Art A. Garcia
		Art A. Garcia
		Senior Vice President and Controller (Principal Accounting Officer)

Three months ended March 31,

(In thousands)

Miscellaneous (income) expense, net

$ (1,495)