Slide 1: Pension Overview
Exhibit No. 99.1 Pension Overview December 2011
Slide 2: Safe Harbor
Safe Harbor Note Regarding Forward-Looking Statements: Certain statements and information included in this presentation are "forward-looking statements" under the Federal Private Securities Litigation Reform Act of 1995 including statements relating to estimated pension expense and contributions for
Slide 3: Contents
Contents Purpose of Overview Page 4 Plan Overview / Recent Changes Page 5 Accounting Fundamentals Page 6 Pension Funded Status Page 10 Pension Investment Strategies and Results Page 18 Pension Contribution Requirements Page 23 Pension Expense Page 27 Pension Equity Charges Page 41 Conclusions Page 4
Slide 4: Purpose of Overview
Purpose of Overview Provide clarity to the main components and drivers of pension expense: generally and specific to Ryder’s continuing operations Provide insight into the factors which create funding requirements: generally and specific to Ryder Provide information on Ryder’s U.S. pension funding s
Slide 5: Plan Overview / Recent Changes
Plan Overview / Recent Changes Ryder historically offered defined-benefit pension benefits in the U.S., U.K, and Canada. Substantially all employees, except U.S. drivers and warehouseman, were covered under the plans. The majority of the employees covered by the plans are in Fleet Management Solutio
Slide 6: Accounting Fundamentals
CAyder Accounting Fundamentals
Slide 7: Accounting Fundamentals
Accounting Fundamentals Guiding literature – FASB Accounting Standards Codification (ASC) Topic 715, “Compensation – Retirement Benefits” Delayed Recognition - changes in pension obligation and the value of net assets are recognized in earnings systematically and gradually over future periods Net Re
Slide 8: Accounting Fundamentals: Pension Assumptions
Accounting Fundamentals Pension Assumptions Discount Rate - rate that discounts expected future cash benefit payments to a present value. Rate determined from models that match the expected benefit payments underlying the liability to coupons and maturities from a hypothetical portfolio of high qual
Slide 9: Accounting Fundamentals: Pension Assumptions
Accounting Fundamentals Pension Assumptions Salary Progression Rate – annual rate of growth based on expected compensation until retirement, including all salary increase components (merit, promotion, equity, overtime and inflation). Rate used to produce our 12/31/2011 pension liability valuation an
Slide 10: Pension Funded Status
CAyder Pension Funded Status
Slide 11: Funded Status
Funded Status Ryder System, Inc. and Subsidiaries Funded Status and Balance Sheet Impact of Pension (Dollars in millions) 2011 2010 2009 Projected benefit obligations (PBO) at 12/31 $ 1,967.6 1,744.2 1,603.6 Fair value of Plan assets at 12/31 1,418.0 1,428.8 1,282.9 Funded status $ (549.5) (315.4) (
Slide 12: Consolidated Funded Status
Funded Status Consolidated Funded Status (Dollars in millions) 2011 2010 2009 U.S. Qualified Plan $ (480.8) (288.2) (287.8) U.S. Non Qualified Plan (42.1) (39.6) (37.1) International Plans (26.6) 12.4 4.2 Total Consolidated Funded Status $ (549.5) (315.4) (320.7) Percent Funded 72% 82% 80% Proprieta
Slide 13: U.S. Qualified Pension Plan
Funded Status U.S. Qualified Pension Plan 12/31/11 12/31/10 12/31/09 (Dollars in millions) (1) Fair Value of Assets (FVA) $ 1,063.4 $ 1,077.8 $ 963.1 PV of Liability (PBO) 1,544.2 (2) 1,366.0 1,250.9 Funded Status $ (480.8) $ (288.2) $ (287.8) Percent Funded 69% 79% 77% (1) Actual return on plan ass
Slide 14: Pension Assets
Funded Status Pension Assets Pension assets are measured at the end of each reporting year (12/31) Point-in-time valuation Reflects fair market value Not market-related (smoothed) value which is another accepted method The fair market value of pension assets changes from year to year as a result of
Slide 15: Pension Liabilities
Funded Status Pension Liabilities Projected Benefit Obligation (PBO) measures the present value of expected future benefit payments to plan participants including future salary increases Point-in-time valuation (year-end unless interim assessment required) Based on service to date of valuation Based
Slide 16: Historical Consolidated Funded Status
Funded Status Historical Consolidated Funded Status 140 120 100 100 93 80 83 82 80 80 78 74 72 66 60 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Note: All years as of 12/31 Proprietary and Confidential 16
Slide 17: Historical Funded Status - U.S. Qualified Plan Only
Funded Status Historical Funded Status - U.S. Qualified Plan Only 140 120 100 100 97 87 80 83 81 77 79 77 69 60 62 40 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Discount Rate 6.50% 6.00% 5.90% 5.65% 6.00% 6.35% 6.25% 6.20% 5.70% 4.90% Note: All years as of 12/31 Proprietary and Confidential 1
Slide 18: Investment Strategies and Results
Pension Investment Strategies and Results
Slide 19: Investment Strategies & Results
Pension Investment Strategies & Results The purpose of the pension fund is to accumulate sufficient assets to meet the Plan’s future payment obligations (liabilities). Ryder’s Investment Committee oversees the asset management and investment activities of our North American pension plans. Responsibi
Slide 20: Asset Allocation Strategy
Pension Investment Strategies & Results Asset Allocation Strategy Ryder’s U.S. pension asset allocation and approved targets are as follows: 12/31/11 12/31/10 Allocation Allocation Target * U.S. Equity 42% 47% 40% Non-U.S. Equity 20% 20% 20% U.S. Fixed Income 31% 26% 30% Alternative Investments 7% 2
Slide 21: U.S. Qualified Pension Plan Asset Return History
Pension Investment Strategies & Results U.S. Qualified Pension Plan Asset Return History 25 25 15 15 7.05% 5 5.75% 5 -0.5% -5 -5 -15 -15 -25 -25 -35 -35 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Annual Actual Asset Return Current Expected Long Term Return on Assets Rolling 15-Year Compound A
Slide 22: Current Expected Long-Term Return on Assets
Current Expected Long-Term Return on Assets Long-term return assumptions are based on: Actuarial review of asset allocation strategy Long-term expected asset returns based on 12/31 actual asset allocation Investment management fees paid using plan assets 2012 expected return for U.S. pension assets
Slide 23: Contribution Requirements
Pension Contribution Requirements
Slide 24: Contribution
Pension Contribution Annual U.S. cash contribution requirements were historically determined under Employee Retirement Income Security Act (ERISA). In 2006, the Pension Protection Act (PPA) was passed which amended ERISA for the purpose of strengthening pension funding and helping the Pension Benefi
Slide 25: Contribution
Pension Contribution For 2011 funding purposes, Ryder used the same elections as used in 2010: Smoothed assets Smoothed discount rate Smoothing should produce more stable contribution requirements Contribution requirements are influenced primarily by the following factors: Funded status Actual retur
Slide 26: Contribution: Estimated Minimum Funding Requirements
Pension Contribution Under PPA minimum funding rules and based on current market assumptions, Ryder will be required to make significant contributions in the next five years. In general, Ryder may elect to make voluntary contributions earlier than required and in amounts greater than the minimum req
Slide 27: Pension Expense
CAyder Pension Expense
Slide 28: Consolidated Pension Expense History
Pension Expense Consolidated Pension Expense History (Dollars in millions) 2011 2010 2009 Service cost $ 14.7 15.2 21.0 Interest cost 97.5 96.1 93.0 Expected return on plan assets (101.8) (93.1) (74.9) Settlement/Curtailment loss - 1.5 0.1 Recognized net actuarial loss 20.2 19.0 24.0 Amortization of
Slide 29: Detail of Consolidated Pension Expense History
Pension Expense Detail of Consolidated Pension Expense History Years Ended December 31: (Amounts in millions) 2011 2010 2009 U.S. Qualified Plan $ 25.9 $ 30.7 47.7 U.S. Non Qualified Plan 3.0 3.1 3.2 International Plans (0.6) 2.7 10.1 Union Administered Plans 6.0 5.2 5.2 Net Pension Expense $ 34.3 $
Slide 30: Service Cost
Pension Expense Service Cost (Amounts in millions) 2011 2010 • Service cost is determined as the Company-administered plans: actuarial present value of Service cost $ 14.7 $ 15.2 benefits for employee Interest cost 97.5 96.1 service during the period Expected return on plan assets (101.8) (93.1) • A
Slide 31: Interest Cost
Pension Expense Interest Cost (Amounts in millions) 2011 2010 • Interest cost represents Company-administered plans: the increase in the Service cost $ 14.7 $ 15.2 projected benefit Interest cost 97.5 96.1 obligation due to the Expected return on plan assets (101.8) (93.1) passage of time Settlement
Slide 32: Expected Return on Assets
Pension Expense Expected Return on Assets (Amounts in millions) 2011 2010 • Return on Plan assets represents the assumed Company-administered plans: change in the fair value of Plan assets during the Service cost $ 14.7 $ 15.2 year, after considering plan Interest cost 97.5 96.1 contributions and Ex
Slide 33: Settlement/Curtailment Loss
Pension Expense Settlement/Curtailment Loss (Amounts in millions) 2011 2010 • Settlement loss recognized in Company-administered plans: 2010 upon election by a Service cost $ 14.7 $ 15.2 number of Canadian employees to receive a lump- Interest cost 97.5 96.1 sum payment Expected return on plan asset
Slide 34: Actuarial Gain / Loss
Pension Expense Actuarial Gain / Loss • Actuarial gains or losses (G/L) include changes in (Amounts in millions) 2011 2010 pension assets or obligations resulting from experience different than Company-administered plans: that assumed or changes in Service cost $ 14.7 $ 15.2 assumptions Interest cos
Slide 35: Prior Service Credit
Pension Expense Prior Service Credit (Amounts in millions) 2011 2010 Company-administered plans: • Prior service credit Service cost $ 14.7 $ 15.2 represents the cost of Interest cost 97.5 96.1 retroactive benefit reductions made in a Expected return on plan assets (101.8) (93.1) Plan amendment Sett
Slide 36: Union-Administered Pension Plans
Union-Administered Pension Plans Ryder participates in 11 multi-employer pension (MEP) plans that provide benefits to employees covered by collective bargaining agreements as follows: Pension Fund Employees Pension Fund Employees IAM National 324 New England Teamsters 19 Western Conference Teamsters
Slide 37: Sensitivity Analysis - U.S. Qualified Pension Plan
Pension Expense Sensitivity Analysis - U.S. Qualified Pension Plan 2011 Pension Projected Assumption Change Expense Benefit Obligation US/Int'l Expected Long-Term Return on Assets 7.45%/6.84% +/- 0.25% -/+ $ 3.6 Million Actual 2011 Asset Returns vs. Expected 7.45%/6.84% +/- 0.25% -/+ $ 0.4 Million C
Slide 38: 2012 Expectations - Consolidated Pension Expense
Pension Expense 2012 Expectations - Consolidated Pension Expense Years Ended December 31: (Amounts in millions) Estimate Actual Actual 2012 2011 2010 U.S. Qualified Plan $ 36.0 25.9 30.7 U.S. Non Qualified Plan 3.4 3.0 3.1 International Plans 3.9 (0.6) 2.7 Union Administered Plans 6.0 6.0 5.2 Net Pe
Slide 39: Drivers of the Change in 2012 Consolidated Pension Expense
Pension Expense Drivers of the Change in 2012 Consolidated Pension Expense (Amounts in millions) 2011 Pension Expense $ 34 Lower than Assumed Return on Assets in 2011 11 Lower Expected Return Assumption 7 Benefit of Pension Contribution (6) Lower Discount Rate 4 Other (1) 2012 Estimated Pension Expe
Slide 40: 2011 Expectations - U.S. Qualified Pension Plan
Pension Expense 2011 Expectations - U.S. Qualified Pension Plan Years Ended December 31: Estimate Actual Actual (Amounts in millions) 2012 2011 2010 U.S. Qualified Pension Plan Service cost $ 12.9 12.3 11.6 Interest cost 74.3 76.2 75.9 Expected return on plan assets (75.1) (77.8) (71.2) Net amortiza
Slide 41: Pension Equity Charges
CAyder Pension Equity Charges
Slide 42: Equity Charges
Pension Equity Charges The funded status of a defined benefit plan is recognized in the balance sheet. Funded Status = Fair value of plan assets compared to PBO Overfunded Plan Balance sheet asset Underfunded Plan Balance sheet liability Year-end (December 31 for Ryder) calculation in conjunction wi
Slide 43: Equity Charges
Pension Equity Charges Negative/Low asset returns and a declining interest rate environment have led to significant unrecognized actuarial losses. Following is a summary of cumulative pension equity charges: Cumulative Equity Annual Charge / Year Charge (Benefit) 2007 $148 ($53) 2008 $480 $332 2009
Slide 44: Conclusions
CAyder Conclusions
Slide 45: Conclusions
Conclusions Ryder has frozen U.S. and Canadian pension plans to most active employees and U.K. pension plan to all employees. Pension expense is sensitive to expected long-term asset returns versus actual returns as well as interest rate changes. Difference between actual and expected asset returns
Slide 46: Conclusions
Conclusions Minimum pension funding requirements are manageable relative to total cash generated. At year end 2011, the plans were 72% funded on accounting basis. The funded status is negative $550M. Underfunded status results in a charge to equity (cumulative $595M at 12/31/11). Pension charge to e
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