Document
 
 
 
 
 
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 JUNE 30, 2018
OR
¨
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

ryderlogoeverbetterwtma26.jpg
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 ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). YES þ        NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
 
Accelerated filer ¨
Non-accelerated filer ¨
 
Smaller reporting company ¨
Emerging growth company ¨
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

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

The number of shares of Ryder System, Inc. Common Stock ($0.50 par value per share) outstanding at June 30, 2018, was 53,094,736.
 
 
 
 
 



RYDER SYSTEM, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
 
 
 
 
 
 
Page No.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


i


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(unaudited)
 
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands, except per share amounts)
Lease and rental revenues
$
858,024

 
797,014

 
$
1,682,277

 
1,564,604

Services revenue
1,072,324

 
865,841

 
2,000,468

 
1,706,528

Fuel services revenue
158,990

 
125,173

 
310,060

 
253,879

Total revenues
2,089,338

 
1,788,028

 
3,992,805

 
3,525,011

 
 
 
 
 
 
 
 
Cost of lease and rental
636,359

 
578,389

 
1,255,566

 
1,157,151

Cost of services
906,048

 
729,578

 
1,693,286

 
1,432,478

Cost of fuel services
155,551

 
121,604

 
302,454

 
247,454

Other operating expenses
30,946

 
27,406

 
64,416

 
58,677

Selling, general and administrative expenses
212,923

 
201,464

 
421,776

 
402,559

Non-operating pension costs
858

 
6,587

 
2,080

 
13,917

Used vehicle sales, net
6,013

 
15,322

 
13,422

 
14,542

Interest expense
42,369

 
34,852

 
80,150

 
69,738

Miscellaneous income, net
(3,627
)
 
(5,454
)
 
(6,137
)
 
(10,407
)
Restructuring and other charges, net
3,615

 
(2,574
)
 
19,409

 
(2,574
)
 
1,991,055

 
1,707,174

 
3,846,422

 
3,383,535

Earnings from continuing operations before income taxes
98,283

 
80,854

 
146,383

 
141,476

Provision for income taxes
54,764


29,459

 
68,932

 
51,545

Earnings from continuing operations
43,519


51,395

 
77,451

 
89,931

Loss from discontinued operations, net of tax
(1,261
)
 
(527
)
 
(1,688
)
 
(657
)
Net earnings
$
42,258

 
50,868

 
$
75,763

 
89,274

 
 
 
 
 
 
 
 
Earnings (loss) per common share — Basic
 
 
 
 
 
 
 
Continuing operations
$
0.83

 
0.97

 
$
1.47

 
1.70

Discontinued operations
(0.02
)
 
(0.01
)
 
(0.03
)
 
(0.01
)
Net earnings
$
0.80

 
0.96

 
$
1.44

 
1.68

 
 
 
 
 
 
 
 
Earnings (loss) per common share — Diluted
 
 
 
 
 
 
 
Continuing operations
$
0.82

 
0.97

 
$
1.46

 
1.69

Discontinued operations
(0.02
)
 
(0.01
)
 
(0.03
)
 
(0.01
)
Net earnings
$
0.80

 
0.96

 
$
1.43

 
1.67

 
 
 
 
 
 
 
 
Cash dividends declared per common share
$
0.52

 
0.44

 
$
1.04

 
0.88

See accompanying notes to consolidated condensed financial statements.
Note: EPS amounts may not be additive due to rounding.

1

RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)

        
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
 
 
 
 
 
 
 
 
Net earnings
$
42,258

 
50,868

 
$
75,763

 
89,274

 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in currency translation adjustment and other
(41,644
)
 
27,601

 
(29,752
)
 
43,343

 
 
 
 
 
 
 
 
Amortization of pension and postretirement items
6,415

 
7,672

 
13,630

 
15,781

Income tax expense related to amortization of pension and postretirement items
(1,265
)
 
(2,467
)
 
(2,874
)
 
(5,512
)
   Amortization of pension and postretirement items, net of tax
5,150

 
5,205

 
10,756

 
10,269

 
 
 
 
 
 
 
 
Change in net actuarial loss and prior service cost
(1,211
)
 
20

 
(1,211
)
 
20

Income tax benefit related to change in net actuarial loss and prior service cost
308

 
180

 
308

 
180

Change in net actuarial loss and prior service cost, net of taxes
(903
)
 
200

 
(903
)
 
200

 
 
 
 
 
 
 
 
Other comprehensive (loss) income, net of taxes
(37,397
)
 
33,006

 
(19,899
)
 
53,812

 
 
 
 
 
 
 
 
Comprehensive income
$
4,861

 
83,874

 
$
55,864

 
143,086

See accompanying notes to consolidated condensed financial statements.




2


RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
 

 
June 30,
2018
 
December 31,
2017
 
(Dollars in thousands, except
share amounts)
Assets:
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
73,582


78,348

Receivables, net of allowance of $15,648 and $13,847, respectively
1,054,469


1,010,908

Inventories
74,079


73,543

Prepaid expenses and other current assets
165,626


160,094

Total current assets
1,367,756

 
1,322,893

Revenue earning equipment, net
8,846,796


8,355,262

Operating property and equipment, net of accumulated depreciation of $1,224,530 and $1,192,377, respectively
823,893


776,704

Goodwill
480,351


395,504

Intangible assets, net of accumulated amortization of $60,800 and $57,420, respectively
79,613


42,930

Direct financing leases and other assets
630,457


570,706

Total assets
$
12,228,866


11,463,999

 
 
 
 
Liabilities and shareholders’ equity:
 
 
 
Current liabilities:
 
 
 
Short-term debt and current portion of long-term debt
$
740,548


826,069

Accounts payable
706,239


599,303

Accrued expenses and other current liabilities
571,777


589,603

Total current liabilities
2,018,564

 
2,014,975

Long-term debt
5,237,377


4,583,582

Other non-current liabilities
822,077


812,642

Deferred income taxes
1,309,445


1,211,129

Total liabilities
9,387,463

 
8,622,328

 
 
 
 
Shareholders’ equity:
 
 
 
Preferred stock, no par value per share — authorized, 3,800,917; none outstanding,
June 30, 2018 or December 31, 2017
—

 
—

Common stock, $0.50 par value per share — authorized, 400,000,000; outstanding,
June 30, 2018 — 53,094,736 December 31, 2017 — 52,955,314
26,547

 
26,478

Additional paid-in capital
1,062,561

 
1,051,017

Retained earnings
2,580,262

 
2,471,677

Accumulated other comprehensive loss
(827,967
)
 
(707,501
)
Total shareholders’ equity
2,841,403


2,841,671

Total liabilities and shareholders’ equity
$
12,228,866


11,463,999

See accompanying notes to consolidated condensed financial statements.

3


RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)


 
Six months ended June 30,
 
2018
 
2017
 
(In thousands)
Cash flows from operating activities from continuing operations:
 
 
 
Net earnings
$
75,763

 
89,274

Less: Loss from discontinued operations, net of tax
(1,688
)
 
(657
)
Earnings from continuing operations
77,451

 
89,931

Depreciation expense
681,285

 
621,020

Goodwill impairment charge
15,513

 
—

Used vehicle sales, net
13,422

 
14,542

Amortization expense and other non-cash charges, net
15,728

 
17,058

Non-operating pension costs and share-based compensation expense
13,732

 
23,979

Deferred income tax expense
79,944

 
42,490

Changes in operating assets and liabilities, net of acquisitions:
 
 
 
Receivables
(26,643
)
 
(75,093
)
Inventories
438

 
2,524

Prepaid expenses and other assets
(15,157
)
 
(1,115
)
Accounts payable
27,429

 
7,666

Accrued expenses and other non-current liabilities
(62,704
)
 
(11,307
)
Net cash provided by operating activities from continuing operations
820,438

 
731,695

 
 
 
 
Cash flows from financing activities from continuing operations:
 
 
 
Net change in commercial paper borrowings and revolving credit facilities
(8,049
)

329,268

Debt proceeds
1,043,309


575,528

Debt repaid
(446,661
)

(925,999
)
Dividends on common stock
(55,095
)
 
(47,250
)
Common stock issued
4,663

 
6,007

Common stock repurchased
(17,221
)
 
(58,228
)
Debt issuance costs and other items
(1,884
)
 
(1,285
)
Net cash provided by (used in) financing activities
519,062

 
(121,959
)
 
 
 
 
Cash flows from investing activities from continuing operations:
 
 
 
Purchases of property and revenue earning equipment
(1,421,301
)
 
(855,252
)
Sales of revenue earning equipment
196,274

 
202,033

Sales of operating property and equipment
5,860

 
3,960

Acquisitions, net of cash acquired
(169,128
)
 
—

Collections on direct finance leases and other items
39,375

 
32,829

Net cash used in investing activities
(1,348,920
)
 
(616,430
)
 
 
 
 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
3,334

 
3,352

Decrease in cash, cash equivalents, and restricted cash from continuing operations
(6,086
)
 
(3,342
)
 
 
 
 
 
 
 
 
Decrease in cash, cash equivalents, and restricted cash from discontinued operations
(631
)
 
(355
)
 
 
 
 
Decrease in cash, cash equivalents, and restricted cash
(6,717
)
 
(3,697
)
Cash, cash equivalents, and restricted cash at January 1
83,022

 
62,639

Cash, cash equivalents, and restricted cash at June 30
$
76,305

 
58,942

See accompanying notes to consolidated condensed financial statements.

4
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)


1. GENERAL

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 2017 Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial Statements and notes thereto except for the update to our revenue recognition significant accounting policies discussed below. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. 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.

Update to Significant Accounting Policies

Our significant accounting policies are detailed in "Note 1: Summary of Significant Accounting Policies" within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2017. Significant changes to our accounting policies as a result of adopting ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) are discussed below:

Revenue Recognition

We recognize revenue upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and amounts collected from customers for taxes, such as sales tax, and remitted to the applicable taxing authorities. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectibility of consideration is probable. We generally recognize revenue over time as we perform because of continuous transfer of control to our customers.

We generate revenue primarily through the lease, rental and maintenance of revenue earning equipment and by providing logistics management and dedicated services. We classify our revenues in the categories of lease and rental, services and fuel. Our lease and rental revenues are accounted for in accordance with existing lease guidance in Leases (Topic 840) and our services and fuel revenues are accounted for in accordance with revenue recognition guidance in Topic 606.

Lease and rental

Lease and rental includes ChoiceLease and commercial rental revenues from our Fleet Management Solutions (FMS) business segment. We offer a full service lease as well as a lease with more flexible maintenance options under our ChoiceLease product line, which are marketed, priced and managed as bundled lease arrangements, and include equipment, service and financing components. We do not offer a stand-alone unbundled lease of new vehicles. For these reasons, both the lease and service components of our leases are included within lease and rental revenues.

ChoiceLease revenue is recognized in accordance with existing lease accounting guidance in Topic 840. Our ChoiceLease arrangements include lease deliverables such as the lease of a vehicle and the executory agreement for the maintenance, insurance, taxes and other services related to the leased vehicles during the lease term. Arrangement consideration is allocated between the lease deliverables and non-lease deliverables based on management's best estimate of the relative fair value of each deliverable. The arrangement consideration is accounted for pursuant to accounting guidance on leases. Our ChoiceLease arrangements provide for a fixed charge billing and a variable charge billing based on mileage or time usage. Fixed charges are typically billed at the beginning of the month for the services to be provided that month. Variable charges are typically billed a month in arrears.


5
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



Revenue from ChoiceLease and rental agreements is recognized based on the classification of the arrangement, typically as either an operating or direct financing lease (DFL).

The majority of our leases and all of our rental arrangements are classified as operating leases and, therefore, we recognize lease and commercial rental revenue on a straight-line basis as it becomes receivable over the term of the lease or rental arrangement. Lease and rental agreements do not usually provide for scheduled rent increases or escalations. However, most lease agreements allow for rate changes based upon changes in the Consumer Price Index (CPI). ChoiceLease and rental agreements also provide for vehicle usage charges based on a time charge and/or a fixed per-mile charge. The fixed time charge, the fixed per-mile charge and the changes in rates attributed to changes in the CPI are considered contingent rentals and are not considered fixed or determinable until the effect of CPI changes is implemented or the equipment usage occurs.

The non-lease components of our ChoiceLease arrangements include access to substitute vehicles, emergency road service, and safety services. These services are available to our customers throughout the lease term. Accordingly, revenue is recognized on a straight-line basis over the lease term.

Leases not classified as operating leases are generally considered direct financing leases. We recognize revenue for direct financing leases using the effective interest method, which provides a constant periodic rate of return on the outstanding investment on the lease. Cash receipts on impaired direct financing lease receivables are first applied to the direct financing lease receivable and then to any unrecognized income. A direct financing lease receivable is considered impaired, based on current information and events, if it is probable that we will be unable to collect all amounts due according to the contractual terms of the lease.

Services

Services include SelectCare and other revenues from our FMS business segment and all Dedicated Transportation Solutions (DTS) and Supply Chain Solutions (SCS) revenues.

Under our SelectCare arrangements, we provide maintenance and repairs required to keep a vehicle in good operating condition, schedule preventive maintenance inspections and provide access to emergency road service and substitute vehicles. The vast majority of our services are routine services performed on a recurring basis throughout the term of the arrangement. From time to time, we provide non-routine major repair services in order to place a vehicle back in service.

Through our SelectCare product line, we provide maintenance services to customers who do not choose to lease vehicles from us. Our maintenance service arrangement provides for a monthly fixed charge and a monthly variable charge based on mileage or time usage. Fixed charges are typically billed at the beginning of the month for the services to be provided that month. Variable charges are typically billed a month in arrears. Most maintenance agreements allow for rate changes based upon changes in the CPI. The fixed per-mile charge and the changes in rates attributed to changes in the CPI are recognized as earned. Costs associated with the activities performed under our maintenance arrangements are primarily comprised of labor, parts and outside work. These costs are expensed as incurred. Non-chargeable maintenance costs have been allocated and reflected within “Cost of services” based on the proportionate maintenance-related labor costs relative to all product lines.

The maintenance service is the only performance obligation in SelectCare contracts. This single performance obligation is satisfied at a point in time for transactional maintenance services or over time for contract maintenance agreements. For contract maintenance agreements, the maintenance performance obligation represents a series of distinct maintenance services performed during the contract period as the services provided are substantially the same and have the same pattern of transfer to our customers. Revenue from SelectCare contracts is recognized as maintenance services are rendered over the terms of the related arrangements. We generally account for long-term maintenance contracts as one-year contracts since our maintenance arrangements are generally cancelable, without penalty, after one year. As a practical expedient, we do not disclose information about remaining performance obligations that have original expected durations of one year or less. For maintenance contracts that are longer than one year (i.e., not cancelable without penalty), the revenue we recognize corresponds directly with the value of service transferred to date. We measure the progress of transfer based on the costs incurred to provide the service to the customer. The amount that we have the right to invoice for services performed aligns with this measure. As a practical expedient, we do not disclose information about remaining performance obligations for these contracts since the revenue recognized corresponds to the amount we have the right to invoice for services performed.


6
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



In our DTS business segment, we combine equipment, maintenance, drivers, administrative services and additional services to provide customers with a dedicated transportation solution. DTS transportation solutions are customized for our customers based on a transportation analysis to create a logistics design that includes the routing and scheduling of vehicles, the efficient use of vehicle capacity and overall asset utilization. In our SCS business, we offer a broad range of logistics management services designed to optimize the supply chain and address the key business requirements of our customers. SCS operates by industry verticals (Automotive, Technology and Healthcare, Consumer Packaged Goods and Retail, and Industrial) to enable our teams to focus on the specific needs of their customers. Our SCS services are supported by a variety of information technology and engineering solutions.

Revenues from DTS and SCS service contracts are recognized as services are rendered in accordance with contract terms, which typically include (1) fixed and variable billing rates, (2) cost-plus billing rates (based on actual costs incurred to perform services and a contracted mark-up), or (3) variable only or fixed only billing rates for the services. Our billing structure aligns with the value provided to our customers. As a practical expedient, we do not disclose information about remaining performance obligations for these contracts since the revenue recognized corresponds to the amount we have the right to invoice for services performed.

Our customers contract with us to provide a significant service of integrating a set of transportation or supply chain logistical components into a single transportation or supply chain solution. Therefore, we typically account for DTS and SCS service contracts as one performance obligation satisfied over time. Less commonly, however, we may promise to provide distinct goods or services within a contract, in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We infrequently sell standard products with observable standalone selling prices. More frequently, we sell a customized customer-specific solution, and in these cases we use the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

Although not material to our financial statements, in certain contracts, a portion of the contract consideration may be contingent upon the satisfaction of performance criteria, attainment of pain/gain share thresholds or volume thresholds. The amount of contingent consideration included in the determination of the transaction price at the commencement of a contract is only included to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from the initial estimates, we will adjust these estimates, which would affect revenue and earnings in the period such variances become known. In transportation management arrangements where we act as principal, revenue is reported on a gross basis, which includes third-party purchased transportation costs. To the extent that we are acting as an agent in the arrangement, revenue is reported net of purchased transportation costs.

Fuel

Fuel services include fuel services revenue from our FMS business segment. We provide our FMS customers with access to fuel at our maintenance facilities across the United States and Canada. Fuel services revenue is invoiced to customers at contracted rates, separate from other services being provided in other contracts, or at retail prices. Revenue from fuel services is recognized when fuel is delivered to customers. As a practical expedient, we do not disclose information about remaining performance obligations for these contracts since the revenue recognized corresponds to the amount we have the right to invoice for services performed. 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 sudden increases or decreases in market fuel prices during a short period of time as customer pricing for fuel services is established based on trailing market fuel costs.

Significant Judgments and Estimates

Our contracts with customers often include promises to transfer multiple services to a customer. Determining whether these services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our DTS and SCS services depend on a significant level of integration and interdependency between the services provided within a contract. Judgment is required to determine whether each service is considered distinct and accounted for separately, or not distinct and accounted for together as a significant integrated service and recognized over time. In making this judgment, we consider whether the services provided, within the context of the contract, represent the transfer of individual services or a combined bundle of services to the customer. This involves evaluating the promises to a customer

7
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



within a contract to identify the services that need to be performed in order for the transfer of control to occur. Since multiple services that occur at different points in time during a contract may be accounted for as an integrated service, judgment is required to assess the pattern of delivery to our customers.

Our judgments on collectibility are initially established when a business relationship with a customer is initiated and is continuously monitored as services are provided. We have a credit rating system based on internally developed standards and ratings provided by third parties. Our credit rating system, along with monitoring for delinquent payments, allows us to make decisions as to whether collectibility may not be reasonably assured. Factors considered during this process include historical payment trends, industry risks, liquidity of the customer, years in business, and judgments, liens or bankruptcies. When collectibility is not considered reasonably assured (typically when a customer is 120 days past due), revenue is not recognized until it is determined that the customer has the ability and intention to pay.

Contract Balances

We do not have material contract assets as we generally invoice customers as we perform services. Contract receivables are recorded in “Receivables, net” in the Consolidated Condensed Balance Sheets. Payment terms vary by contract type, although terms generally include a requirement of payment within 90 days. As a practical expedient, we do not assess whether a contract has a significant financing component as the period between the receipt of customer payment and the transfer of service to the customer is less than a year. Our contract liabilities consist of deferred revenue. We record deferred revenues when cash payments are received or due in advance of our performance, including amounts that are refundable. We classify deferred revenue as current as we expect to recognize this revenue within 12 months. Revenue is recognized upon satisfaction of the performance obligation.

Costs to Obtain and Fulfill a Contract

Our incremental direct costs of obtaining a contract, which primarily consist of sales commissions and start-up costs, are deferred and amortized over the period of contract performance or a longer period, generally the estimated life of the customer relationship if renewals are expected and the renewal commission is not commensurate with the initial commission. We capitalize incremental direct costs of obtaining a contract that i) relate directly to the contract and ii) are expected to be recovered through revenue generated under the contract. This requires an evaluation of whether the costs are incremental and would not have occurred absent the customer contract.

The current and noncurrent portions of incremental costs to obtain and fulfill a contract are included in “Prepaid expenses and other current assets” and “Direct financing leases and other assets” respectively, in the Consolidated Condensed Balance Sheets. Costs are amortized in “Selling, general and administrative expenses” in the Consolidated Condensed Statements of Earnings on a straight-line basis over the expected period of benefit.



2. RECENT ACCOUNTING PRONOUNCEMENTS

Income Taxes

In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits - but does not require - companies to reclassify stranded tax effects caused by 2017 tax reform from accumulated other comprehensive income to retained earnings. Additionally, the ASU requires new disclosures by all companies, whether they opt to do the reclassification or not. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. We adopted this standard using the aggregate portfolio approach and elected to reclassify $101 million of tax benefits resulting from the federal income tax rate change, net of associated state tax effect, from accumulated other comprehensive loss to retained earnings as of the beginning of 2018. This standard did not impact our results of operations or cash flows.
    





8
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



Share-Based Compensation

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The amendments in this update are effective for annual periods, and interim periods within those annual periods,
beginning after December 15, 2017, with early adoption permitted. We adopted the standard during the first quarter of 2018 and it did not have an impact on our consolidated financial position, results of operations, or cash flows.

Business Combinations

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The objective of the update is to add guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill, and consolidation. Companies must use a prospective approach to adopt ASU 2017-01, which was effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. We prospectively adopted this standard in the first quarter of 2018. The new standard did not have a material impact to the Company's consolidated condensed financial statements during the first or second quarter of 2018.

Statement of Cash Flows

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows, which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. In November 2016, the FASB issued additional guidance related to the statement of cash flows, which requires companies to explain the change during the period in the total of cash, cash equivalents, and restricted cash or restricted cash equivalents. The standard was effective January 1, 2018, with early adoption permitted. We adopted the standard during the first quarter of 2018. As a result of this update, restricted cash is included within cash and cash equivalents on our statements of consolidated cash flows. As of June 30, 2018 and December 31, 2017, we had $3 million and $5 million respectively, in prepaid expenses and other current assets associated with our like-kind exchange program for certain of our U.S. based revenue earning equipment.

Leases

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases. The objective of this update is to increase stakeholder's awareness of the amendments and to expedite the improvements related to ASU No. 2016-02, Leases (Topic 842). The amendments to this update affect narrow aspects of the guidance issued in ASU No. 2016-02, which are not yet effective. We will adopt the standard effective January 1, 2019, using the modified retrospective transition method. We are currently evaluating the impact of the adoption of this update on our consolidated financial position, results of operations, and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases. The standard requires lessees to classify leases as either finance or operating leases. This classification will determine whether the related expense will be recognized based on asset amortization and interest on the obligation or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of- use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. We do not expect the lessee requirements to have a material impact on our consolidated financial position, results of operations or cash flows.

The new standard continues to require lessors to separate the lease component from the non-lease component; however, it provides clarification on the scope of non-lease components (e.g., maintenance services). The new standard also provides more guidance on how to identify and separate the components. The lease component will be accounted for using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The non-lease component will be accounted for in accordance with the revenue recognition guidance, see below section "Revenue Recognition." The adoption of the new lease standard will primarily impact our ChoiceLease product line, which includes a vehicle lease as well as maintenance and other services related to the vehicle. We will generally continue to recognize revenue for the lease portion of the product line on a straight-line basis. Revenue from maintenance services will be recognized consistent with the timing pattern of maintenance costs, which will generally require the deferral of some portion of the



9
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



customer's lease payments when received, as maintenance costs are typically not incurred evenly over the life of a ChoiceLease contract.

We will adopt the standard effective January 1, 2019, using the modified retrospective transition method. Upon adoption, we will record a cumulative-effect adjustment to recognize deferred revenue related to the maintenance services on the opening balance sheet for 2017 and restate all prior periods presented (2017 and 2018). We expect the cumulative-effect adjustment will have a significant impact on our consolidated financial position. We continue to evaluate the impact of adoption of this standard on our results of operations. We do not expect the adoption of this standard to have an impact on our cash flows.

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which together with related, subsequently issued guidance, requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. In addition, Topic 606 requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted Topic 606 in the first quarter of 2018 using the full retrospective method, which required us to restate each prior reporting period presented.

Upon adoption of Topic 606, we applied the standard’s practical expedient that permits the omission of disclosures of the prior period allocation of the transaction price to remaining performance obligations and an explanation of when the entity expects to recognize that amount as revenue.

Adoption of the new revenue recognition standard impacted our previously reported Consolidated Condensed Statements of Operations and Comprehensive Income results as follows (in thousands, except per share amounts):
 
Three months ended June 30, 2017
 
Six months ended June 30, 2017
 
 
 
New Revenue
 
 
 
 
 
New Revenue
 
 
 
As Previously
 
Standard
 
 
 
As Previously
 
Standard
 
 
 
Reported
 
Adjustments
 
As Revised
 
Reported
 
Adjustments
 
As Revised
Services revenue (1)
$
871,027

 
(5,186
)
 
865,841

 
$
1,722,894

 
(16,366
)
 
1,706,528

Total revenues

1,793,214

 
(5,186
)
 
1,788,028

 
3,541,377

 
(16,366
)
 
3,525,011

Cost of services (1)
734,764

 
(5,186
)
 
729,578

 
1,448,844

 
(16,366
)
 
1,432,478

Selling, general and administrative expenses
201,626

 
(162
)
 
201,464

 
403,387

 
(828
)
 
402,559

Earnings from continuing operations before income taxes

80,692

 
162

 
80,854

 
140,648

 
828

 
141,476

Provision for income taxes
29,349

 
110

 
29,459

 
51,026

 
519

 
51,545

Earnings from continuing operations

51,343

 
52

 
51,395

 
89,622

 
309

 
89,931

Net earnings
50,816

 
52

 
50,868

 
88,965

 
309

 
89,274

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
83,822

 
52

 
83,874

 
142,777

 
309

 
143,086

 
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share - Basic
 
 
 
 
 
 
 
 
 
 
 
        Continuing operations

$
0.97

 
—

 
0.97

 
$
1.69

 
0.01

 
1.70

 
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share - Diluted
 
 
 
 
 
 
 
 
 
 
 
        Continuing operations
$
0.97

 
—

 
0.97

 
$
1.68

 
0.01

 
1.69

————————————
(1)
Amount includes $5 million and $16 million for the three and six months ended June 30, 2017, respectively, related to correction of a prior period error. We historically accounted for certain freight brokerage agreements as a principal and presented revenue and costs related to subcontracted transportation on a gross basis in our financial statements. In adopting Topic 606, we reviewed and evaluated our existing revenue contracts and determined that certain of our freight brokerage agreements should have historically been presented on a net basis as an agent. We evaluated the materiality of this revision, quantitatively and qualitatively. We concluded it was not material to any of our previously issued consolidated financial statements and correction as an out of period adjustment in the current period was not material.

10
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



Adoption of the new revenue recognition standard impacted our previously reported Consolidated Condensed Balance Sheet as follows (in thousands)
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
New Revenue
 
 
 
 
 
 
 
As Previously
 
Standard
 
 
 
 
 
 
 
Reported
 
Adjustment
 
As Revised
Prepaid expenses and other current assets
 
$
159,483

 
611

 
160,094

Total current assets
 
1,322,282

 
611

 
1,322,893

Direct financing leases and other assets
 
559,549

 
11,157

 
570,706

Total assets
 
11,452,231

 
11,768

 
11,463,999

Accrued expenses and other current liabilities
 
587,406

 
2,197

 
589,603

Total current liabilities
 
2,012,778

 
2,197

 
2,014,975

Other non-current liabilities
 
812,089

 
553

 
812,642

Deferred income taxes
 
1,208,766

 
2,363

 
1,211,129

Total liabilities
 
8,617,215

 
5,113

 
8,622,328

Retained earnings
 
2,465,022

 
6,655

 
2,471,677

Total shareholders' equity
 
2,835,016

 
6,655

 
2,841,671

Total liabilities and shareholders' equity
 
11,452,231

 
11,768

 
11,463,999

        


3. ACQUISITIONS

On April 2, 2018, we acquired all of the outstanding equity of MXD Group, Inc. (MXD), an e-commerce fulfillment provider with a national network of facilities, including last mile delivery capabilities, for a purchase price of approximately $120 million. The acquisition is included in our SCS business segment. We acquired MXD to build the foundation of e-fulfillment and final mile capabilities for our e-commerce business.

During the six months ended June 30, 2018, we incurred acquisition transaction costs of $0.7 million related to the purchase that are reflected within "Selling, general and administrative expenses" in our Consolidated Condensed Statements of Earnings. The following table provides the preliminary purchase price allocation to the assets and the liabilities assumed as of the closing date of the MXD acquisition.
 
(In thousands)
Assets:
 
Operating property and equipment
$
11,903

Goodwill
70,529

Customer relationships and other intangibles
37,551

Other assets, primarily accounts receivable
32,492

 
152,475

Liabilities:
 
Accrued liabilities
(18,108
)
Deferred income taxes
(9,610
)
Other liabilities, primarily accounts payable
(5,053
)
Net assets acquired
$
119,704


The excess of the purchase consideration over the aggregate estimated fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized reflects e-commerce growth opportunities, opportunities to cross-sell with our existing customer base and expected cost synergies of combining MXD with our business. The goodwill is not expected to be deductible for income tax purposes. Customer relationship intangible assets are expected to be amortized over 14 years.

11
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



The results of operations of MXD were not material to our results of operations and therefore pro forma financial information for the acquisition was not presented.

On June 15, 2018, we acquired all of the outstanding equity of Metro Truck & Tractor Leasing (Metro), a full service leasing, rental and maintenance company for a purchase price of approximately $53 million. The acquisition is included in our FMS business segment. We acquired Metro to expand our presence in the Baltimore, Maryland area. The preliminary purchase accounting for this acquisition resulted in $3 million of the purchase price allocated to customer relationships and other intangible assets, $19 million allocated to tangible assets net of liabilities assumed and the remaining $30 million represents goodwill. The goodwill recognized reflects expected cost synergies and operational improvements in the combined companies and expected growth opportunities with Metro's current customers and prospects in the Maryland market. The goodwill is not expected to be deductible for income tax purposes. This allocation is subject to change as the Company finalizes purchase accounting. Transaction costs related to the acquisition were $0.4 million during the six months ended June 30, 2018 and were reflected within "Selling, general and administrative expenses" in our Consolidated Condensed Statements of Earnings.

The assets, liabilities and results of operations of Metro were not material to our consolidated financial position or results of operations and therefore pro forma financial information for the acquisition was not presented.

The estimated fair values of assets acquired and liabilities assumed in the acquisitions of both MXD and Metro are preliminary and are based on the information that was available as of the acquisition date. We believe that we have sufficient information to provide a reasonable basis for estimating the fair values of assets acquired and liabilities assumed; however, we are currently obtaining additional information which will be necessary to finalize our estimate of fair values. Therefore, the preliminary measurements of estimated fair values reflected are subject to change. We expect to finalize the valuation and complete the purchase consideration allocation no later than one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to fixed assets, income and non-income taxes, the valuation of intangible assets acquired and residual goodwill, as well as certain contingent liabilities. The preliminary amounts assigned to intangible assets by type for the MXD and Metro acquisitions are based on our preliminary valuation model. 



4. REVENUE

Disaggregation of Revenue

The following tables disaggregate our revenue by primary geographical market, major product/service lines, and industry:

Primary Geographical Markets
 
Three months ended June 30, 2018
 
FMS
 
DTS
 
SCS
 
Eliminations
 
Total
 
(In thousands)
United States
$
1,134,499

 
330,622

 
484,194

 
(135,569
)
 
1,813,746

Canada
75,864

 
—

 
47,747

 
(5,692
)
 
117,919

Europe
85,090

 
—

 
—

 
—

 
85,090

Mexico
—

 
—

 
66,216

 
—

 
66,216

Singapore
—

 
—

 
6,367

 
—

 
6,367

Total revenue
$
1,295,453

 
330,622

 
604,524

 
(141,261
)
 
2,089,338











12
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



 
Three months ended June 30, 2017
 
FMS
 
DTS
 
SCS
 
Eliminations
 
Total
 
(In thousands)
United States
$
1,016,870

 
272,446

 
363,466

 
(109,071
)
 
1,543,711

Canada
68,000

 

 
41,650

 
(4,630
)
 
105,020

Europe
78,709

 
—

 
—

 
—

 
78,709

Mexico
—

 
—

 
52,701

 
—

 
52,701

Singapore
—

 
—

 
7,887

 
—

 
7,887

Total revenue
$
1,163,579

 
272,446

 
465,704

 
(113,701
)
 
1,788,028


 
Six months ended June 30, 2018
 
FMS
 
DTS
 
SCS
 
Eliminations
 
Total
 
(In thousands)
United States
$
2,214,954

 
629,592

 
875,849

 
(263,285
)
 
3,457,110

Canada
150,332

 
—

 
90,841

 
(10,765
)
 
230,408

Europe
172,746

 
—

 
—

 
—

 
172,746

Mexico
—

 
—

 
120,476

 
—

 
120,476

Singapore
—

 
—

 
12,065

 
—

 
12,065

Total revenue
$
2,538,032

 
629,592

 
1,099,231

 
(274,050
)
 
3,992,805


 
Six months ended June 30, 2017
 
FMS
 
DTS
 
SCS
 
Eliminations
 
Total
 
(In thousands)
United States
$
2,007,131

 
539,076

 
721,812

 
(218,653
)
 
3,049,366

Canada
133,822

 
—

 
82,496

 
(8,778
)
 
207,540

Europe
155,096

 
—

 
—

 
—

 
155,096

Mexico
—

 
—

 
97,742

 
—

 
97,742

Singapore
—

 
—

 
15,267

 
—

 
15,267

Total revenue
$
2,296,049

 
539,076

 
917,317

 
(227,431
)
 
3,525,011



Major Products/Service Lines
 
Three months ended June 30, 2018
 
FMS
 
DTS
 
SCS
 
Eliminations
 
Total
 
(In thousands)
ChoiceLease
$
700,779

 
—

 
—

 
(65,203
)
 
635,576

SelectCare
125,266

 
—

 
—

 
(7,543
)
 
117,723

Commercial rental
232,425

 
—

 
—

 
(12,282
)
 
220,143

Fuel
215,230

 
—

 
—

 
(56,233
)
 
158,997

Other
21,753

 
—

 
—

 
—

 
21,753

DTS
—

 
330,622

 
—

 
—

 
330,622

SCS
—

 
—

 
604,524

 
—

 
604,524

Total revenue
$
1,295,453

 
330,622

 
604,524

 
(141,261
)
 
2,089,338




13
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



 
Three months ended June 30, 2017
 
FMS
 
DTS
 
SCS
 
Eliminations
 
Total
 
(In thousands)
ChoiceLease
$
662,462

 
—

 
—

 
(57,996
)
 
604,466

SelectCare
117,384

 
—

 
—

 
(6,979
)
 
110,405

Commercial rental
199,340

 
—

 
—

 
(8,887
)
 
190,453

Fuel
165,014

 
—

 
—

 
(39,839
)
 
125,175

Other
19,379

 
—

 
—

 
—

 
19,379

DTS
—

 
272,446

 
—

 
—

 
272,446

SCS
—

 
—

 
465,704

 
—

 
465,704

Total revenue
$
1,163,579

 
272,446

 
465,704

 
(113,701
)
 
1,788,028


 
Six months ended June 30, 2018
 
FMS
 
DTS
 
SCS
 
Eliminations
 
Total
 
(In thousands)
ChoiceLease
$
1,391,210

 
—

 

 
(128,373
)
 
1,262,837

SelectCare
247,139

 
—

 

 
(14,364
)
 
232,775

Commercial rental
436,955

 
—

 

 
(22,345
)
 
414,610

Fuel
419,037

 
—

 

 
(108,968
)
 
310,069

Other
43,691

 
—

 
—

 
—

 
43,691

DTS
—

 
629,592

 
—

 
—

 
629,592

SCS
—

 
—

 
1,099,231

 
—

 
1,099,231

Total revenue
$
2,538,032

 
629,592

 
1,099,231

 
(274,050
)
 
3,992,805


 
Six months ended June 30, 2017
 
FMS
 
DTS
 
SCS
 
Eliminations
 
Total
 
(In thousands)
ChoiceLease
$
1,318,774

 
—

 
—

 
(114,297
)
 
1,204,477

SelectCare
230,993

 
—

 
—

 
(14,348
)
 
216,645

Commercial rental
373,346

 
—

 
—

 
(17,398
)
 
355,948

Fuel
335,268

 
—

 
—

 
(81,388
)
 
253,880

Other
37,668

 
—

 
—

 
—

 
37,668

DTS
—

 
539,076

 
—

 
—

 
539,076

SCS
—

 
—

 
917,317

 
—

 
917,317

Total revenue
$
2,296,049

 
539,076

 
917,317

 
(227,431
)
 
3,525,011













14
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



Industry

Our SCS business segment includes revenue from the below industries:
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Automotive
$
231,886

 
188,362

 
$
439,678

 
384,803

Technology and healthcare
114,388

 
92,294

 
217,485

 
174,952

CPG and retail
197,694

 
126,428

 
333,052

 
245,377

Industrial and other
60,556

 
58,620

 
109,016

 
112,185

Total revenue
$
604,524

 
465,704

 
$
1,099,231

 
917,317


Contract Balances

We record a receivable related to revenue recognized when we have an unconditional right to invoice. There were no material contract assets as of June 30, 2018 or December 31, 2017. Trade receivables were $882 million and $899 million at June 30, 2018 and December 31, 2017, respectively. Impairment losses on receivables were not material during the second quarters of 2018 and 2017.

Contract liabilities relate to payments received in advance of performance under the contract. Changes in contract liabilities are due to our performance under the contract. The amount of revenue recognized during the six months ended June 30, 2018 that was included within deferred revenue at January 1, 2018 was $10.5 million.



5. REVENUE EARNING EQUIPMENT

 
June 30, 2018
 
December 31, 2017
 
Cost
 
Accumulated
Depreciation
 
Net  Book
Value (1)
 
Cost
 
Accumulated
Depreciation
 
Net  Book
Value (1)
 
(In thousands)
Held for use:
 
ChoiceLease
$
10,283,609

 
(3,548,389
)
 
6,735,220

 
$
10,002,981

 
(3,367,431
)
 
6,635,550

Commercial rental
3,016,416

 
(1,008,785
)
 
2,007,631

 
2,616,706

 
(1,001,965
)
 
1,614,741

Held for sale
373,267

 
(269,322
)
 
103,945

 
403,229

 
(298,258
)
 
104,971

Total
$
13,673,292

 
(4,826,496
)
 
8,846,796

 
$
13,022,916

 
(4,667,654
)
 
8,355,262

 ————————————
(1)
Revenue earning equipment, net includes vehicles under capital leases of $23 million, less accumulated depreciation of $12 million, at June 30, 2018, and $29 million, less accumulated depreciation of $14 million, at December 31, 2017.

We lease revenue earning equipment to customers for periods typically ranging from three to seven years for trucks and tractors and up to ten years for trailers. The majority of our leases are classified as operating leases. However, some of our revenue earning equipment leases are classified as direct financing leases and, to a lesser extent, sales-type leases. As of June 30, 2018 and December 31, 2017, the net investment in direct financing and sales-type leases was $453 million and $447 million, respectively. Our direct financing lease customers operate in a wide variety of industries, and we have no significant customer concentrations in any one industry. We assess credit risk for all of our customers including those who lease equipment under direct financing leases prior to signing a ChoiceLease contract. For those customers who are designated as high risk, we typically require deposits to be paid in advance in order to mitigate our credit risk. Additionally, our receivables are collateralized by the vehicles, which further mitigates our credit risk.


15
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

As of June 30, 2018 and December 31, 2017, the amount of direct financing lease receivables past due was not significant, and there were no impaired receivables. Accordingly, we do not believe there is a material risk of default with respect to the direct financing lease receivables.

Revenue earning equipment held for sale is stated at the lower of carrying amount or fair value less costs to sell. Losses on vehicles held for sale for which carrying values exceeded fair value are recognized at the time they arrive at our used truck sales centers and are presented within “Used vehicle sales, net” in the Consolidated Condensed Statements of Earnings. For revenue earning equipment held for sale, we stratify our fleet by vehicle type (trucks, tractors and trailers), weight class, age and other relevant characteristics and create classes of similar assets for analysis purposes. For a certain population of our revenue earning equipment held for sale, 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. Expected declines in market prices were also considered when valuing the vehicles held for sale. These vehicles held for sale were classified within Level 3 of the fair value hierarchy.

The following table presents our assets held for sale that are measured at fair value on a nonrecurring basis and considered a Level 3 fair value measurement:
 
 
 
Total Losses (2)
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
June 30, 2018
 
December 31, 2017
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Assets held for sale:
 
 
 
 
 
 
 
 
 
 
 
Revenue earning equipment (1):
 
 
 
 
 
 
 
 
 
 
 
Trucks
$
37,895

 
33,208

 
$
10,295

 
10,927

 
$
18,896

 
16,727

Tractors
22,883

 
27,976

 
2,101

 
12,134

 
5,478

 
17,317

Trailers
1,478

 
2,100

 
1,605

 
2,605

 
3,198

 
3,173

Total assets at fair value
$
62,256

 
63,284

 
$
14,001

 
25,666

 
$
27,572

 
37,217

 ————————————
(1)
Assets held for sale in the above table only include the portion of revenue earning equipment held for sale where net book values exceeded fair values and fair value adjustments were recorded. The net book value of assets held for sale that were less than fair value was $42 million as of June 30, 2018 and December 31, 2017.
(2)
Total losses represent fair value adjustments for all vehicles reclassified to held for sale throughout the period for which fair value was less than net book value.

For the three and six months ended June 30, 2018 and 2017, the components of used vehicle sales, net were as follows:
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017

(In thousands)
 
 
 
 
 
 
Gains on vehicle sales, net
$
(7,988
)
 
(10,344
)
 
$
(14,150
)
 
(22,675
)
Losses from fair value adjustments
14,001

 
25,666

 
27,572

 
37,217

Used vehicle sales, net
$
6,013

 
15,322

 
$
13,422

 
14,542




16
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



6. GOODWILL

The carrying amount of goodwill attributable to each reportable business segment was as follows:
 
Fleet
Management
Solutions
 
Dedicated Transportation Solutions
 
Supply Chain Solutions
 
Total
 
(In thousands)
Balance at December 31, 2017
 
 
 
 
 
 
 
     Goodwill
$
237,176

 
40,808

 
146,741

 
424,725

     Accumulated impairment losses
(10,322
)
 
—

 
(18,899
)
 
(29,221
)
 
226,854

 
40,808

 
127,842

 
395,504

     Acquisitions (1)
29,902

 
—

 
70,529

 
100,431

     Foreign currency translation adjustments
189

 
—

 
(260
)
 
(71
)
Balance at June 30, 2018
 
 
 
 
 
 
 
     Goodwill
267,267

 
40,808

 
217,010

 
525,085

     Accumulated impairment losses
(25,835
)
 
—

 
(18,899
)
 
(44,734
)
 
$
241,432

 
40,808

 
198,111

 
480,351

———————————
(1)
See Note 3, "Acquisitions,"in the Notes to Consolidated Condensed Financial Statements for additional information.

On October 1, 2017, we completed our annual goodwill impairment test and determined there was no impairment. However, based on market conditions impacting our FMS Europe reporting unit's financial performance in the first quarter of 2018, we performed an interim impairment test as of March 31, 2018. Based on our analysis, we determined that all goodwill associated with our FMS Europe reporting unit was impaired and recorded an impairment charge of $16 million. The impairment charge was recorded within “Restructuring and other charges, net” in our Consolidated Condensed Statements of Earnings.



17
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

7. ACCRUED EXPENSES AND OTHER LIABILITIES

 
June 30, 2018
 
December 31, 2017
 
Accrued
Expenses
 
Non-Current
Liabilities
 
Total
 
Accrued
Expenses
 
Non-Current
Liabilities
 
Total
 
(In thousands)
Salaries and wages
$
108,435

 
—

 
108,435

 
$
135,930

 
—

 
135,930

Deferred compensation
4,881

 
59,637

 
64,518

 
4,269

 
58,411

 
62,680

Pension benefits
3,842

 
400,023

 
403,865

 
3,863

 
412,417

 
416,280

Other postretirement benefits
1,473

 
18,715

 
20,188

 
1,481

 
19,760

 
21,241

Other employee benefits
17,433

 
—

 
17,433

 
28,636

 
3,279

 
31,915

Insurance obligations (1)
139,638

 
260,452

 
400,090

 
130,848

 
242,473

 
373,321

Operating taxes
94,849

 
—

 
94,849

 
95,848

 
—

 
95,848

Income taxes
5,028

 
22,492

 
27,520

 
8,550

 
23,888

 
32,438

Interest
34,243

 
—

 
34,243

 
30,003

 
—

 
30,003

Deposits, mainly from customers
76,533

 
3,436

 
79,969

 
69,903

 
3,638

 
73,541

Deferred revenue
19,664

 
—

 
19,664

 
14,004

 
—

 
14,004

Restructuring liabilities (2)
8,913

 
—

 
8,913

 
13,074

 
—

 
13,074

Other
56,845

 
57,322

 
114,167

 
53,194

 
48,776

 
101,970

Total
$
571,777

 
822,077

 
1,393,854

 
$
589,603

 
812,642

 
1,402,245

 ————————————
(1)
Insurance obligations are primarily comprised of self-insured claim liabilities.
(2)
The reduction in restructuring liabilities from December 31, 2017, principally represents cash payments for employee termination costs. The majority of the balance remaining in restructuring liabilities is expected to be paid by the end of 2018.



8. INCOME TAXES

Tax Law Changes

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act made broad and complex changes to the U.S. tax code and it will take time to fully interpret the changes. The Act significantly impacted 2018 earnings, and will impact earnings in future periods; however, we have not fully completed the accounting under Income Taxes (Topic 740) for certain of the Act’s new provisions. In accordance with Topic 740, to the extent the accounting for certain income tax effects of the Act was incomplete, but we were able to determine a reasonable estimate of those effects, a provisional amount (“provisional amount”) has been included in our financial statements. Conversely, where a reasonable estimate of the tax effects of the Act cannot be determined, no related provisional amounts have been included in the financial statements. We intend to adjust the tax effects for the relevant items during the allowed 2018 measurement period.

The Act also requires companies to pay a one-time transition tax on unremitted earnings of certain foreign subsidiaries that had not been subject to U.S. income tax and creates new taxes on certain foreign earnings. We included a $33 million provisional estimate for the transition tax in the December 31, 2017, financial statements. On April 2, 2018, the Internal Revenue Service issued Notice 2018-26, which required us to increase the provisional estimate related to the one-time transition tax. We estimated the additional tax provision to be approximately $29 million. The transition tax estimate will be further adjusted during the second half of 2018 as we refine our determination of historical earnings and profits and the amount of cash and cash equivalents held in foreign entities.

As of June 30, 2018, we have alternative minimum tax (AMT) credit carryforwards of $24 million, which do not expire and can be used to offset regular income taxes in future years. Under the Act, the AMT was repealed and taxpayers may claim a refund of 50% of their remaining AMT credit carryforwards (to the extent the credits exceed regular tax for the year) in 2018, 2019 and 2020. Any AMT credits remaining after 2020 will be refunded in 2021. Pursuant to the requirements of the Balanced


18
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



Budget and Emergency Deficit Control Act of 1985, refundable AMT credits may be subject to sequestration, which is currently 6.2% for refunds after 2019, and during the first quarter of 2018, the Internal Revenue Service clarified sequestration would apply to refundable AMT credits under the Act. We reclassified our credits to a receivable and recorded a charge of $1 million to account for the sequestration reduction. The reclassification and provision for sequestration are adjustments to provisional estimates of the tax effects of the Act.

Uncertain Tax Positions

We are subject to tax audits in numerous jurisdictions in the U.S. and foreign countries. 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 recognize the tax benefit from uncertain tax positions that are at least more likely than not of being sustained upon audit, based on the technical merits of the tax position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Such calculations 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. We reevaluate uncertain tax positions each quarter based on factors including, but not limited to, changes in facts or circumstances, expiration of statutes of limitations, changes in tax law, effectively settled issues under audit, and new audit activity. Depending on the jurisdiction, such a change in recognition or measurement may result in the recognition of a tax benefit or an additional charge to the tax provision in the period.

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 2008.
State — for the majority of states, tax returns are closed through fiscal year 2011 with the exception of states with net operating loss carryforwards that are generally closed through 1997.
Foreign — we are no longer subject to foreign tax examinations by tax authorities for tax years before 2010 in Canada, 2012 in Brazil, 2013 in Mexico and 2013 in the U.K., which are our major foreign tax jurisdictions.

At June 30, 2018 and December 31, 2017, the total amount of gross unrecognized tax benefits (including interest and penalties, excluding the federal benefit on state issues) was $66 million and $68 million, respectively. During the first quarter of 2018, we determined that reserves for certain uncertain tax positions should have been reversed in prior periods when the statutes of limitations expired. As the amounts were not material to our consolidated financial statements in any individual period, and the cumulative amount is not material to 2018 results, we recognized a one-time $3 million benefit in our provision for income taxes related to this reversal.

Effective Tax Rate

Our effective income tax rates from continuing operations for the second quarter of 2018 and first half of 2018 were 55.7% and 47.1%, respectively, compared with 36.4% in both the second quarter and first half of 2017. The increase primarily reflects an additional tax provision recorded to adjust the provisional estimate for the one-time transition tax, partially offset by a lower federal tax rate due to the Act.



19
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

9. DEBT
 
Weighted-Average
Interest Rate
 
 
 
 
 
 
 
June 30,
2018
 
December 31,
2017
 
Maturities
 
June 30,
2018
 
December 31,
2017
 
 
 
 
 
 
 
(In thousands)
Short-term debt and current portion of long-term debt:
 
 
 
 
 
 
 
 
 
Short-term debt
1.70%
 
1.79%
 

 
$
44,107

 
35,509

Current portion of long-term debt
 
 
 
 
 
 
696,441

 
790,560

Total short-term debt and current portion of long-term debt
 
 
 
 
 
740,548

 
826,069

Long-term debt:
 
 
 
 
 
 
 
 
 
U.S. commercial paper (1)
2.28%
 
1.56%
 
2020
 
519,916

 
570,218

Canadian commercial paper (1)
1.70%
 
—%
 
2020
 
47,175

 
—

Global revolving credit facility
3.12%
 
2.80%
 
2020
 
600

 
17,328

Unsecured U.S. notes — Medium-term notes (1)
3.06%
 
2.73%
 
2018-2025
 
4,562,972

 
4,014,091

Unsecured U.S. obligations
3.34%
 
2.79%
 
2019
 
50,000

 
50,000

Unsecured foreign obligations
1.61%
 
1.50%
 
2020-2021
 
224,406

 
230,380

Asset-backed U.S. obligations (2)
2.12%
 
1.85%
 
2018-2025
 
544,911

 
491,899

Capital lease obligations
3.48%
 
3.53%
 
2018-2023
 
17,349

 
20,871

Total before fair market value adjustment
 
 
 
 
 
 
5,967,329

 
5,394,787

Fair market value adjustment on notes subject to hedging (3)
 
 
 
 
 
(15,986
)
 
(7,192
)
Debt issuance costs
 
 
 
 
 
 
(17,525
)
 
(13,453
)
 
 
 
 
 
 
 
5,933,818

 
5,374,142

Current portion of long-term debt
 
 
 
 
 
 
(696,441
)
 
(790,560
)
Long-term debt
 
 
 
 
 
 
5,237,377

 
4,583,582

Total debt
 
 
 
 
 
 
$
5,977,925

 
5,409,651

 ————————————
(1)
Amounts are net of unamortized original issue discounts of $8 million and $6 million at June 30, 2018 and December 31, 2017.
(2)
Asset-backed U.S. obligations are related to financing transactions involving revenue earning equipment.
(3)
The notional amount of the executed interest rate swaps designated as fair value hedges was $825 million at June 30, 2018 and December 31, 2017.

We maintain a $1.2 billion global revolving credit facility with a syndicate of twelve lending institutions led by Bank of America N.A., Bank of Tokyo-Mitsubishi UFJ, Ltd., BNP Paribas, Mizuho Corporate Bank, Ltd., Royal Bank of Canada, Lloyds Bank Plc, U.S. Bank National Association and Wells Fargo Bank, N.A. The facility matures in January 2020. The agreement provides for annual facility fees that range from 7.5 basis points to 25 basis points based on Ryder's long-term credit ratings. The annual facility fee is currently 10 basis points, which applies to the total facility size of $1.2 billion.

The credit facility is used primarily to finance working capital but 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 June 30, 2018). At our option, the interest rate on borrowings under the credit facility is based on LIBOR, prime, federal funds or local equivalent rates. 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 net worth of less than or equal to 300%. Net worth, as defined in the credit facility, represents shareholders' equity excluding any accumulated other comprehensive income or loss associated with our pension and other postretirement plans. The ratio at June 30, 2018 was 172%. At June 30, 2018, there was $588 million available under the credit facility.

Our global revolving credit facility enables us to refinance short-term obligations on a long-term basis. Short-term commercial paper obligations not required for working capital needs are classified as long-term as we have both the intent and ability to refinance on a long-term basis. In addition, we have the intent and ability to refinance the current portion of certain

20
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

long-term debt on a long-term basis. At June 30, 2018, we classified $567 million of short-term commercial paper, $300 million of the current portion of long-term debt and $50 million of short-term debt as long-term debt. At December 31, 2017, we classified $570 million of short-term commercial paper and $16 million of the current portion of long-term debt as long-term debt.

In June 2018, we issued $450 million of unsecured medium-term notes maturing in June 2023. In February 2018, we issued $450 million of unsecured medium-term notes maturing in March 2023. The proceeds from these notes were used to pay off maturing debt and for general corporate purposes. If these notes are downgraded below investment grade following, and as a result of, a change in control, the note holders can require us to repurchase all or a portion of the notes at a purchase price equal to 101% of principal value plus accrued and unpaid interest.

In June 2018, we received $100 million from financing transactions backed by a portion of our revenue earning equipment.
The proceeds from these transactions were used for general corporate purposes. We have provided end of term guarantees for the residual value of the revenue earning equipment in these transactions. The transaction proceeds, along with the end of term residual value guarantees, have been included within "asset-backed U.S. obligations" in the preceding table.

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 sells, on a revolving basis, an ownership interest in certain of these accounts receivable to a committed purchaser. The subsidiary is considered a VIE and is consolidated based on our control of the entity’s activities. 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 increased from $175 million to $225 million during the second quarter of 2018. If no event occurs which causes early termination, the 364-day program will expire on June 12, 2019. 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. Sales of receivables under this program are accounted for as secured borrowings based on our continuing involvement in the transferred assets. No amounts were outstanding under the program at June 30, 2018 or December 31, 2017.

At June 30, 2018 and December 31, 2017, we had letters of credit and surety bonds outstanding totaling $351 million and $350 million, respectively, which primarily guarantee the payment of insurance claims.

The fair value of total debt (excluding capital lease and asset-backed U.S. obligations) at June 30, 2018 and December 31, 2017 was approximately $5.41 billion and $4.95 billion, respectively. For publicly-traded debt, estimates of fair value were based on market prices. For other debt, fair value was estimated based on a model-driven approach using rates currently available to us for debt with similar terms and remaining maturities. The fair value measurements of our publicly-traded debt and other debt were classified within Level 2 of the fair value hierarchy. The carrying amounts reported in the Consolidated Condensed Balance Sheets for “Cash and cash equivalents,” “Receivables, net” and “Accounts payable” approximate fair value because of the immediate or short-term maturities of these financial instruments.


21
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

10. DERIVATIVES

From time to time, we enter into interest rate derivatives to manage our fixed and variable interest rate exposure and to better match the repricing of debt instruments to that of our portfolio of assets. We assess the risk that changes in interest rates will have either on the fair value of debt obligations or on the amount of future interest payments by monitoring changes in interest rate exposures and by evaluating hedging opportunities. We regularly monitor interest rate risk attributable to both our outstanding or forecasted debt obligations as well as any offsetting hedge positions. This risk management process involves the use of analytical techniques, including cash flow sensitivity analyses, to estimate the expected impact of changes in interest rates on our future cash flows.
 
As of June 30, 2018, we had interest rate swaps outstanding that are designated as fair value hedges for certain debt obligations, with a total notional value of $825 million and maturities through 2020. Interest rate swaps are measured at fair value on a recurring basis using Level 2 fair value inputs. The fair value of these interest rate swaps was a liability of $16 million and $7 million as of June 30, 2018 and December 31, 2017, respectively. The amounts are presented in "Accrued expenses and other current liabilities" and "Other non-current liabilities" in our Consolidated Condensed Balance Sheets. Changes in the fair value of our interest rate swaps were offset by changes in the fair value of the hedged debt instruments. Accordingly, there was no ineffectiveness related to the interest rate swaps.

As of June 30, 2018, we had an interest rate swap outstanding that was designated as a cash flow hedge for a certain debt obligation, with a total notional value of $15 million and maturity through 2021. The interest rate swap is measured at fair value on a recurring basis using Level 2 fair value inputs. The fair value of this interest rate swap was not material as of June 30, 2018. The amounts are presented in "Other non-current liabilities" in our Consolidated Condensed Balance Sheets. The effective portion of the change in the fair value of the hedging instrument is reported in other comprehensive income. The amounts accumulated in other comprehensive income are reclassified to earnings when the related interest payments affect earnings. There was no ineffectiveness related to the interest rate swap.



11. SHARE REPURCHASE PROGRAMS

In December 2017, our Board of Directors authorized a share repurchase program intended to mitigate the dilutive impact of shares issued under our employee stock plans (the program). Under the program, management is authorized to repurchase up to 1.5 million shares of common stock, the sum of which will not exceed the number of shares issued to employees under the Company’s employee stock plans from December 31, 2017 to December 13, 2019. 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 prearranged written plans for the Company under Rule 10b5-1 of the Securities Exchange Act of 1934 as part of the program, which allow for share repurchases during Ryder’s quarterly blackout periods as set forth in the trading plan.

During the six months ended June 30, 2018 and June 30, 2017, we repurchased approximately 234,000 shares for $17.2 million and 828,000 shares for $58.2 million, respectively.



22
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)



12. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following summary sets forth the components of accumulated other comprehensive loss, net of tax:
 
 
Currency
Translation
Adjustments and Other
 
Net Actuarial
Loss (1)
 
Prior Service (Cost)/
Credit (1)
 
Accumulated
Other
Comprehensive
Loss
 
 
(In thousands)
December 31, 2017
 
$
(140,438
)
 
(560,153
)
 
(6,910
)
 
(707,501
)
Amortization
 
—

 
10,587

 
169

 
10,756

Other current period change
 
(29,752
)
 
(903
)
 
—

 
(30,655
)
Adoption of new accounting standard (2)
 
—

 
(98,987
)
 
(1,580
)
 
(100,567
)
June 30, 2018
 
$
(170,190
)
 
(649,456
)
 
(8,321
)
 
(827,967
)

 
 
Currency
Translation
Adjustments and Other
 
Net Actuarial
Loss (1)
 
Prior Service
Credit (1)
 
Accumulated
Other
Comprehensive
Loss
 
 
(In thousands)
December 31, 2016
 
$
(206,610
)
 
(620,292
)
 
(7,130
)
 
(834,032
)
Amortization
 
—

 
10,159

 
110

 
10,269

Other current period change
 
43,343

 
200

 
—

 
43,543

June 30, 2017
 
$
(163,267
)
 
(609,933
)
 
(7,020
)
 
(780,220
)
_______________________ 
(1)
These amounts are included in the computation of net pension expense. See Note 15, "Employee Benefit Plans," for additional information.
(2)
Refer to Note 2, "Recent Accounting Pronouncements" for additional information.

The loss from currency translation adjustments in the six months ended June 30, 2018 of $30 million was primarily due to the weakening of the British Pound and Canadian Dollar against the U.S. Dollar. The gain from currency translation adjustments in the six months ended June 30, 2017 of $43 million was primarily due to the strengthening of the British Pound and the Canadian Dollar against the U.S. Dollar.





23
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS — (Continued)
(unaudited)

13. EARNINGS PER SHARE

The following table presents the calculation of basic and diluted earnings per common share from continuing operations:
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands, except per share amounts)
Earnings per share — Basic:
 
 
 
 
 
 
 
Earnings from continuing operations
$
43,519

 
51,395

 
$
77,451

 
89,931

Less: Earnings allocated to unvested stock
(158
)
 
(186
)
 
(277
)
 
(318
)
Earnings from continuing operations available to common shareholders — Basic
$
43,361

 
51,209

 
$
77,174

 
89,613

 
 
 
 
 
 
 
 
Weighted average common shares outstanding — Basic
52,370

 
52,663

 
52,388

 
52,804

 
 
 
 
 
 
 
 
Earnings from continuing operations per common share — Basic
$
0.83

 
0.97

 
$
1.47

 
1.70