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MarketScreener Homepage  >  Equities  >  Nyse  >  Ryder System, Inc.    R

RYDER SYSTEM, INC.

(R)
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RYDER SYSTEM : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

10/28/2020 | 03:52pm EST
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations (MD&A) should be read in conjunction with the unaudited
Condensed Consolidated Financial Statements and notes thereto included under
Item 1. In addition, reference should be made to our audited Consolidated
Financial Statements and notes thereto and related MD&A included in the 2019
Annual Report on Form 10-K.

OVERVIEW

Ryder is a leading logistics and transportation company. Our operating segments
are aggregated into reportable business segments based upon similar economic
characteristics, products, services, customers and delivery methods. We report
our financial performance based on three business segments: (1) Fleet Management
Solutions (FMS), which provides full service leasing and leasing with flexible
maintenance options, commercial rental, and contract or transactional
maintenance services of trucks, tractors and trailers to customers principally
in the U.S., Canada and the U.K.; (2) Supply Chain Solutions (SCS), which
provides integrated logistics solutions, including distribution management,
dedicated transportation, last mile delivery and professional services in North
America; and (3) Dedicated Transportation Solutions (DTS), which provides
turnkey transportation solutions in the U.S. that includes dedicated vehicles,
drivers and engineering, and administrative support. Dedicated transportation
services provided as part of an operationally integrated, multi-service, supply
chain solution to SCS customers are primarily reported in the SCS business
segment.

We operate in highly competitive markets. Our customers select us based on
numerous factors including service quality, price, technology and service
offerings. As an alternative to using our services, customers may choose to
provide these services for themselves, or may choose to obtain similar or
alternative services from other third-party vendors. Our customer base includes
enterprises operating in a variety of industries including food and beverage
service, transportation and logistics, automotive, retail and consumer goods,
industrial, housing, technology, and business and personal services.

Our results of operations and financial condition are influenced by a number of
factors including, but not limited to: used vehicle sales; macroeconomic and
other market conditions, including pricing and demand; customer contracting
activity and retention; rental demand; maintenance costs; residual value
estimates and other depreciation changes; currency exchange rate fluctuations;
customer preferences; inflation; fuel and energy prices; general economic
conditions; insurance costs; interest rates; labor costs; unemployment; tax
rates; changes in accounting or regulatory requirements; and cybersecurity
attacks. Additionally, in 2020, our business has, and may continue to be,
impacted by the coronavirus (COVID-19) pandemic. For a detailed discussion of
its impact on our results and future considerations, refer to our "Consolidated
Results" and "Operating Results by Business Segment" discussions below. In
addition, for a detailed description of certain risk factors that impact our
business, including those related to the COVID-19 pandemic, refer to "Item
1A-Risk Factors" and "Special Note Regarding Forward-Looking Statements"
sections included in this Quarterly Report on Form 10-Q and in our 2019 Annual
Report on Form 10-K.

This MD&A includes certain non-GAAP financial measures. Refer to the "Non-GAAP Financial Measures" section of this MD&A for information on the non-GAAP measures, including reconciliations to the most comparable GAAP financial measure and the reasons why we believe each measure is useful to investors.

                                       25

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

Operating results were as follows:

                                    Three months ended September 30,                 Nine months ended September 30,                        Change 2020/2019
                                        2020                    2019                    2020                    2019             Three Months              Nine Months
                                                                                (In thousands, except per share amounts)
Total revenue                   $       2,150,575$ 2,223,932$       6,207,163$ 6,649,252               (3)%                      (7)%
Operating revenue (1)                   1,790,166            1,795,641                  5,184,657            5,350,260                -%                       (3)%

Earnings (loss) from continuing
operations before income taxes
(EBT) (2)                       $          54,765          $   (91,260)$        (153,646)$    79,960                NM                        NM
Comparable EBT (2) (3)                     77,750              (73,015)                   (77,123)             108,780                NM                        NM
Earnings (loss) from continuing
operations                                 45,085              (91,538)                  (137,749)              29,804                NM                

NM

Comparable earnings (loss) from
continuing operations (3)                  63,821              (78,098)                   (57,740)              54,218                NM                        NM
Net earnings (loss)                        35,834              (91,455)                  (147,878)              29,076                NM                        NM

Earnings (loss) per common
share (EPS) - Diluted
Continuing operations           $            0.85          $     (1.75)         $           (2.64)         $      0.56                NM                        NM
Comparable (3)                               1.21                (1.49)                     (1.11)                1.03                NM                        NM
Net earnings (loss)                          0.68                (1.75)                     (2.83)                0.55                NM                        NM


------------
(1)Non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures"
section of this MD&A for a reconciliation of total revenue to operating revenue
and the reasons why management believes this measure is important to investors.
(2)EBT includes (rounded to the closest thousand):
                           Three months ended September 30,         Nine months ended September 30,                   Change 2020/2019
                               2020                  2019               2020                2019             Three Months           Nine Months
                                                                              (In thousands)
Impact from prior
residual value estimate
changes*                 $      100,000$ 208,000          $ 

405,000 $ 266,000$ (108,000)$ 139,000 *Includes (gains) losses on used vehicles sales, net of ($13) million and $23 million for the three months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, these impacts include (gains) losses of $17 million and $49 million. respectively. Refer to Note 5, "Revenue Earning Equipment," in the Notes to the Condensed Consolidated Financial Statements for further information on used vehicle sales.



(3)Non-GAAP financial measures. Refer to the "Non-GAAP Financial Measures"
section for a reconciliation of EBT, net earnings and earnings per diluted
common share to the comparable measures and the reasons why management believes
these measures are important to investors.
NM - Not meaningful

Total revenue decreased 3% in the third quarter of 2020 primarily due to
decreases in fuel revenue. Operating revenue (a non-GAAP measure excluding fuel,
subcontracted transportation and ChoiceLease liability insurance revenues)
remained relatively flat in the third quarter of 2020 driven by revenue growth
in SCS and ChoiceLease offset by lower revenues in our commercial rental
business (FMS) and DTS. For the nine months ended September 30, 2020, total
revenue decreased 7% and operating revenue decreased 3% due to lower revenue in
all of our business segments, including the impact of the economic slowdown from
the COVID-19 pandemic particularly in our commercial rental and automotive (SCS)
businesses.

EBT increased to income of $55 million in the third quarter of 2020 as compared
to a loss of ($91) million in the prior year period primarily due to a declining
impact of depreciation expense from prior residual value estimate changes and
higher gains on used vehicles sold totaling $108 million. EBT was also benefited
by improved lease results and higher SCS performance.

For the nine months ended September 30, 2020, EBT was a loss of ($154) million
as compared to income of $80 million due to higher depreciation expense from
prior residual value estimate changes of $139 million. The nine months ended
September 30, 2020 also included negative estimated impacts in the first half of
2020 from the COVID-19 pandemic of approximately $70 million, which was net of
temporary cost savings of approximately $35 million.

For discussion on the depreciation expense related to the residual value
estimate changes in the first half of 2020 and the impact on our FMS segment,
refer to "Critical Accounting Estimates" discussion further below and Note 5,
"Revenue Earning
                                       26

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
Equipment," in our Condensed Consolidated Financial Statements. For more
information on the depreciation expense related to the change in residual value
estimates in the third quarter of 2019, refer to "Critical Accounting Estimates"
in Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations in our 2019 Annual Report on Form 10-K.

The COVID-19 pandemic has negatively impacted several areas of our businesses.
In our FMS business segment, we experienced lower demand for commercial rental
and declines in the used vehicle market through the second quarter (refer to
Note 5, "Revenue Earning Equipment" and "Critical Accounting Estimates" section
below for additional information on residual value estimate changes and trends
related to used vehicle sales). During the third quarter, we have started to
experience a steady recovery in these areas as compared to the second quarter.
In our Supply Chain Solutions (SCS) business segment, we experienced a
deterioration in customer activity during the first half of 2020, primarily due
to the temporary shutdowns in the automotive industry, which restarted their
operations during the second quarter and are now generally operating at above
pre-COVID-19 levels. In addition, we have experienced a decline in our sales
growth opportunities in all of our businesses. Throughout the year, we have
established additional credit loss reserves due to our expectations for
COVID-19-related payment activity as a result of increased bankruptcies or
insolvencies, or a delay in payments (refer to Note 4, "Receivables," for
further information on credit loss reserves). We have attempted to mitigate the
adverse impacts from the pandemic through cost reduction measures throughout the
year, including lower discretionary and overhead spending, and a reduction in
capital expenditures, as well as temporary employee furloughs primarily in the
second quarter. In addition, we took planned actions at the end of the second
quarter to reduce headcount, primarily in our North American and U.K. FMS
operations. We have also experienced lower employee turnover and medical costs
throughout the year.

In October 2020, we announced a one-time, special recognition and retention
bonus of approximately $30 million for our front-line employees in recognition
of the work performed during the pandemic. The bonus will be paid to
non-incentive compensation plan eligible employees and recognized in earnings in
the fourth quarter .

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES
Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among
other things, provides for an acceleration of alternative minimum tax credit
refunds, the deferral of certain employer payroll taxes, the availability of an
employee retention credit, and expands the availability of net operating loss
usage. In addition, other governments in state, local and foreign jurisdictions
in which we operate have also enacted certain relief measures. We continue to
monitor new and updated legislation, however the provisions enacted have not had
a material impact on our financial statements or liquidity position.

While we are experiencing positive momentum in the third quarter, any further
negative effects of the pandemic may have an impact on our business and
financial results, as well as on significant judgments and estimates, including
those related to goodwill and other asset impairments, residual values and other
depreciation assumptions, deferred income taxes and annual effective tax rates,
variable revenue considerations, the valuation of our pension plans, and
allowance for credit losses.
                                       27

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

CONSOLIDATED RESULTS

Lease & Related Maintenance and Rental

                             Three months ended September 30,            Nine months ended September 30,                        Change 2020/2019
                                 2020                2019                   2020                    2019             Three Months              Nine Months
                                                              (In thousands)

Lease & related maintenance and rental revenues $ 933,771$ 959,189$ 2,730,187$ 2,792,581

               (3)%                      (2)%
Cost of lease & related
maintenance and rental          758,351            877,767                  2,351,993            2,229,596               (14)%                      5%
Gross margin                 $  175,420$  81,422          $         378,194          $   562,985                NM                      (33)%
Gross margin %                    19%                 8%                    14%                     20%



Lease & related maintenance and rental revenues represent revenues from our
ChoiceLease and commercial rental product offerings within our FMS business
segment. Revenues decreased 3% to $934 million in the third quarter of 2020 and
2% to $2.7 billion for the nine months ended September 30, 2020 driven by lower
commercial rental revenue, partially offset by higher ChoiceLease pricing. The
decline in commercial rental revenue was due to reduced demand, including
impacts from COVID-19. Revenue for the nine months ended September 30, 2020 also
benefited from ChoiceLease fleet growth.

Cost of lease & related maintenance and rental represents the direct costs
related to lease & related maintenance and rental revenues. These costs consist
of depreciation of revenue earning equipment, maintenance costs (primarily
repair parts and labor), and other costs such as licenses, insurance and
operating taxes. Cost of lease & related maintenance and rental excludes
interest costs from vehicle financing, which are reported within "Interest
Expense" in our Condensed Consolidated Statements of Earnings. Cost of lease &
related maintenance and rental decreased 14% in the third quarter of 2020 due to
declining depreciation expense impacts from prior residual value estimate
changes. For the nine months ended September 30, 2020, cost of lease & related
maintenance and rental increased 5% due to higher depreciation expense impacts
from prior residual value estimate changes. Both the third quarter and nine
months ended September 30, 2020 have benefited from lower maintenance and other
costs due to less activity as a result of the COVID-19 pandemic as well as our
maintenance cost savings initiatives. Refer to our "Critical Accounting
Estimates" discussion further below for additional information on the residual
value estimate changes in 2020.

Lease & related maintenance and rental gross margin increased in the third
quarter of 2020 primarily due to declining depreciation impact from prior
residual value estimate changes, partially offset by lower commercial rental
revenue and utilization. Gross margin for the nine months ended September 30,
2020 decreased due to higher depreciation as a result of our prior residual
value estimate changes and lower commercial rental revenue and utilization.
Gross margin as a percentage of revenue increased to 19% in the third quarter of
2020 as a result of the lower depreciation impact. For the nine months ended
September 30, 2020, gross margin as a percentage of revenue decreased to 14% as
a result of the higher depreciation impact.

Services

                                     Three months ended September 30,                 Nine months ended September 30,                        Change
2020/2019
                                         2020                    2019                    2020                    2019             Three Months              Nine Months
                                                                      (In thousands)
Services revenue                 $       1,120,544$ 1,120,900$       3,174,999$ 3,412,048                -%                       (7)%
Cost of services                           932,510              948,087                  2,680,292            2,896,182               (2)%                      (7)%
Gross margin                     $         188,034          $   172,813          $         494,707          $   515,866                9%                       (4)%
Gross margin %                           17%                     15%                     16%                     15%



Services revenue represents all the revenues associated with our SCS and DTS
business segments, as well as SelectCare and fleet support services associated
with our FMS business segment. Services revenue remained flat in the third
quarter due to an increase in revenue in SCS offset by a decrease in revenue in
DTS. For the nine months ended September 30, 2020, services revenue decreased 7%
primarily driven by decreases in revenue due to lower activity in our automotive
vertical due to temporary
                                       28

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

production shutdowns in the second quarter and other impacts from COVID-19 in both SCS and DTS and non-renewed business in DTS.


Cost of services represents the direct costs related to services revenue and is
primarily comprised of salaries and employee-related costs, subcontracted
transportation (purchased transportation from third parties), fuel, vehicle
liability costs and maintenance costs. Cost of services decreased 2% in the
third quarter and 7% for the nine months ended September 30, 2020 primarily due
to lower activity related to COVID-19 in SCS and DTS and non-renewed business in
DTS.

Services gross margin increased 9% in the third quarter of 2020. For the nine
months ended September 30, 2020, services gross margin decreased 4%. Gross
margin as a percentage of revenue increased to 17% in the third quarter of 2020
and 16% for the nine months ended September 30, 2020. The increases in gross
margin as a percentage of revenue reflects higher revenue and operating
performance in SCS and higher operating performance in DTS for the three and
nine months ended September 30, 2020.

Fuel

                                    Three months ended September
                                                 30,                     Nine months ended September 30,                    Change 2020/2019
                                       2020               2019               2020                2019            Three Months              Nine Months
                                                               (In thousands)
Fuel services revenue              $  96,260$ 143,843$  301,977$ 444,623               (33)%                    (32)%
Cost of fuel services                 92,930            140,247             291,359            431,885               (34)%                    (33)%
Gross margin                       $   3,330$   3,596$   10,618$  12,738               (7)%                     (17)%
Gross margin %                          3%                 2%                 4%                  3%



Fuel services revenue represents fuel services provided to our FMS customers.
Fuel services revenue decreased 33% in the third quarter of 2020 and 32% for the
nine months ended September 30, 2020 primarily reflecting lower fuel costs
passed through to customers and lower gallons sold as a result of COVID-19.

Cost of fuel services includes the direct costs associated with providing our
customers with fuel. These costs include fuel, salaries and employee-related
costs of fuel island attendants and depreciation of our fueling facilities and
equipment. Cost of fuel services decreased 34% in the third quarter of 2020 and
33% for the nine months ended September 30, 2020 as a result of lower fuel costs
and lower gallons sold.

Fuel services gross margin decreased in the third quarter of 2020 and for the
nine months ended September 30, 2020. Fuel services gross margin as a percentage
of revenue increased to 3% in the third quarter of 2020 and 4% for the nine
months ended September 30, 2020. Fuel is largely a pass-through to customers for
which we realize minimal changes in margin during periods of steady market fuel
prices. However, fuel services margin is impacted by sudden increases or
decreases in market fuel prices during a short period of time, as customer
pricing for fuel is established based on trailing market fuel costs. Fuel
services gross margin for the third quarter of 2020 and nine months ended
September 30, 2020 was impacted by these price change dynamics as fuel prices
fluctuated during the period.

Other Operating Expenses
                                      Three months ended September         Nine months ended September
                                                  30,                                  30,                                 Change 2020/2019
                                         2020              2019               2020              2019            Three Months              Nine Months
                                                               (In thousands)
Other operating expenses             $  30,009$ 28,924$  93,423$ 92,213                4%                        1%


Other operating expenses include costs related to our owned and leased facilities within the FMS segment, such as facility depreciation, rent, purchased insurance, utilities and taxes. These facilities are utilized to provide maintenance to our ChoiceLease, commercial rental, and SelectCare customers. Other operating expenses remained relatively flat in the third quarter of 2020 and for the nine months ended September 30, 2020.

                                       29

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

Selling, General and Administrative Expenses

                               Three months ended September 30,       Nine months ended September 30,                    Change 2020/2019
                                   2020                2019               2020                2019            Three Months              Nine Months
                                                           (In thousands)
Selling, general and
administrative expenses (SG&A) $  211,183$ 216,037$  643,866$ 673,778               (2)%                      (4)%
Percentage of total revenue         10%                10%                 10%                10%



SG&A expenses decreased 2% in the third quarter of 2020 and 4% for the nine
months ended September 30, 2020. The decrease in SG&A expenses in third quarter
of 2020 primarily reflects lower travel expense and professional services fees.
For the nine months ended September 30, 2020, the decrease was primarily driven
by lower compensation related expenses due to temporary employee furloughs that
occurred primarily in the second quarter, lower travel expense and lower
professional services fees partially offset by higher bad debt expense. SG&A
expenses as a percentage of total revenue remained flat at 10% for both the
third quarter of 2020 and the nine months ended September 30, 2020.

Non-Operating Pension Costs

                                        Three months ended September
                                                     30,                     Nine months ended September 30,                   Change 2020/2019
                                           2020               2019               2020               2019            Three Months              Nine Months
                                                                  (In thousands)
Non-operating pension costs            $    7,200$  6,885$    9,357$ 20,060                5%                      (53)%



Non-operating pension costs includes the components of our net periodic benefit
cost other than service cost. These components include interest cost, expected
return on plan assets, amortization of actuarial loss and prior service cost, as
well as settlement or curtailment charges. Non-operating pension costs remained
relatively flat in the third quarter and decreased $11 million for the nine
months ended September 30, 2020 due to favorable asset returns in 2019 and a
decrease in interest rates. This decrease was offset by a curtailment loss of $6
million recognized in the third quarter of 2020 as a result of a freeze of our
pension plans (see Note 15, "Employee Benefit Plans", for further information).

Used Vehicle Sales, Net
                            Three months ended September          Nine months ended September
                                         30,                                  30,                                 Change 2020/2019
                               2020               2019               2020              2019            Three Months              Nine Months
                                                      (In thousands)
(Gains) losses on used
vehicle sales, net         $  (12,919)$ 22,734$  17,253$ 49,091                NM                      (65)%



Used vehicle sales, net includes gains or losses from sales of used vehicles,
selling costs associated with used vehicles and write-downs of vehicles held for
sale to fair market values (referred to as "valuation adjustments"). Used
vehicle sales, net was a net gain of $13 million in the third quarter of 2020 as
compared to a net loss of $23 million in the prior year period due to lower
valuation adjustments and gains on sales of used vehicles. Losses on used
vehicle sales, net decreased to $17 million for the nine months ended September
30, 2020 primarily due to lower valuation adjustments as compared to the prior
year.

Average proceeds per unit for tractors in the third quarter and for the nine
months ended September 30, 2020 decreased from the prior year reflecting higher
sales volumes in the wholesale markets, which generally has lower proceeds per
unit, and lower retail pricing as compared to the prior year. Average proceeds
per unit for trucks in the third quarter increased slightly from the prior year
reflecting higher retail sales volumes. For the nine months ended September 30,
2020, average proceeds per unit for trucks decreased from the prior year
reflecting lower retail pricing as compared to the prior year. The following
table presents the used vehicle pricing changes compared with the prior year:
                 Proceeds per unit change 2020/2019
             Three Months                  Nine Months

Tractors        (11)%                         (23)%
Trucks            1%                           (4)%


                                       30

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

Interest expense
                                Three months ended September
                                            30,                     Nine months ended September 30,                    Change 2020/2019
                                   2020              2019               2020                2019            Three Months              Nine Months
                                                          (In thousands)
Interest expense               $  62,608$ 62,475$  192,459$ 178,570                -%                        8%
Effective interest rate            3.2%              3.2%               3.3%                3.3%



Interest expense remained relatively flat in the third quarter of 2020 and
increased 8% for the nine months ended September 30, 2020 reflecting higher
average outstanding debt partially offset by lower variable interest rates. The
increase in average outstanding debt reflects higher vehicle capital spending in
2019 and additional borrowings under our trade receivable program and global
revolving credit facility in 2020.

Miscellaneous income, net

                                   Three months ended September 30,       Nine months ended September 30,                    Change 2020/2019
                                        2020               2019               2020                2019            Three Months              Nine Months
                                                               (In 

thousands)

Miscellaneous (income) loss, net $ (10,552)$ 676 $

  (11,830)         $ (29,457)               NM                      (60)%


Miscellaneous (income) loss, net consists of investment income on securities
used to fund certain benefit plans, interest income, gains on sales of operating
property, foreign currency transaction remeasurement and other non-operating
items. Miscellaneous (income) loss, net was income of $11 million in the third
quarter of 2020 as compared to a loss of $1 million in the prior year primarily
due to higher rabbi trust investment income and gains recognized on the sale of
certain FMS properties in 2020. Miscellaneous (income) loss, net was income of
$12 million for the nine months ended September 30, 2020 as compared to income
of $29 million in the prior year reflecting lower gains on sale of properties,
lower rabbi trust investment income and foreign currency transaction
remeasurement losses in 2020.

Restructuring and other items, net

                                    Three months ended September
                                                30,                       Nine months ended September 30,                     Change 2020/2019
                                       2020              2019                2020                 2019             Three Months              Nine Months
                                                                (In thousands)

Restructuring and other items, net $ 24,490$ 11,360 $

  92,637               27,374                NM                        NM



Refer to Note 16, "Other Items Impacting Comparability," in the Notes to the
Condensed Consolidated Financial Statements for a discussion of restructuring
charges and other fees.


                                       31

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
Provision for income taxes
                                 Three months ended September
                                              30,                     Nine months ended September 30,                   Change 2020/2019
                                    2020               2019               2020               2019            Three Months              Nine Months
                                                           (In thousands)
Provision for (benefit from)
income taxes                    $    9,680$    278$  (15,897)$ 50,156                NM                        NM
Effective tax rate from
continuing operations               17.7%              0.3%              (10.3)%             62.7%
Comparable tax rate on
continuing operations (1)           17.9%              7.0%              (25.1)%             50.2%


------------

(1)Non-GAAP Financial Measure. Refer to the "Non-GAAP Financial Measures" section for a reconciliation of the effective tax rate from continuing operations to the comparable tax rate on continuing operations and the reasons why management believes these measures are important to investors.

Refer to our discussion of the changes in our provision for income taxes and effective tax rate from continuing operations in Note 8, "Income Taxes".

Discontinued Operations

                                   Three months ended September
                                                30,                     Nine months ended September 30,                    Change 2020/2019
                                      2020               2019                2020               2019            Three Months              Nine Months
                                                              (In 

thousands)

Earnings (loss) from discontinued
operations, net of tax            $   (9,251)$     83$   (10,129)$   (728)               NM                        NM



In the third quarter of 2020, we accrued $9 million related primarily to adverse
developments in several cases related to payments for transportation services in
Brazil that was recorded in discontinued operations.
                                       32

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

OPERATING RESULTS BY BUSINESS SEGMENT


                                        Three months ended September 30,                 Nine months ended September 30,                        Change 2020/2019
                                            2020                    2019                    2020                    2019             Three Months              Nine Months
                                                                         (In thousands)
Total Revenue:
Fleet Management Solutions          $       1,297,217$ 1,397,346$       3,835,631$ 4,139,855               (7)%                      (7)%
Supply Chain Solutions                        685,415              617,600                  1,833,180            1,902,582                11%                      (4)%
Dedicated Transportation Solutions            299,680              359,211                    928,512            1,071,076               (17)%                    (13)%
Eliminations                                 (131,737)            (150,225)                  (390,160)            (464,261)               12%                      16%
Total                               $       2,150,575$ 2,223,932$       6,207,163$ 6,649,252               (3)%                      (7)%
Operating Revenue: (1)
Fleet Management Solutions          $       1,153,366$ 1,189,585$       3,384,425$ 3,495,296               (3)%                      (3)%
Supply Chain Solutions                        492,288              453,711                  1,364,656            1,413,556                9%                       (3)%
Dedicated Transportation Solutions            233,629              247,715                    698,245              731,399               (6)%                      (5)%
Eliminations                                  (89,117)             (95,370)                  (262,669)            (289,991)               7%                        9%
Total                               $       1,790,166$ 1,795,641$       5,184,657$ 5,350,260                -%                       (3)%

Earnings (Loss) Before Taxes:
Fleet Management Solutions          $          16,152          $  (108,550)$        (202,157)$    10,107                NM                        NM
Supply Chain Solutions                         57,848               34,595                    125,789              112,686                67%                      12%
Dedicated Transportation Solutions             24,728               18,490                     58,141               63,034                34%                      (8)%
Eliminations                                  (12,936)              (6,118)                   (30,750)             (42,586)               NM                       28%
                                               85,792              (61,583)                   (48,977)             143,241                NM                        NM
Unallocated Central Support
Services                                       (8,042)             (11,432)                   (28,146)             (34,461)               30%                      18%
Non-operating pension costs                    (7,200)              (6,885)                    (9,357)             (20,060)              (5)%                      53%
Other items impacting
comparability, net (2)                        (15,785)             (11,360)                   (67,166)              (8,760)              (39)%                      NM
Earnings (loss) from continuing
operations before income taxes      $          54,765          $   (91,260)$        (153,646)$    79,960                NM                        NM


------------
(1)Non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures"
section of this MD&A for a reconciliation of total revenue to operating revenue
and segment total revenue to segment operating revenue for FMS, SCS and DTS, as
well as the reasons why management believes these measures are important to
investors.
(2)Refer to Note 16, "Other Items Impacting Comparability," and below for a
discussion of items excluded from our primary measure of segment performance.
NM - Not meaningful

As part of management's evaluation of segment operating performance, we define
the primary measurement of our segment financial performance as segment
"Earnings from continuing operations before taxes" (EBT), which includes an
allocation of Central Support Services (CSS), and excludes non-operating pension
costs and certain other items as discussed in Note 16, "Other Items Impacting
Comparability," in the Notes to Condensed Consolidated Financial Statements. CSS
represents those costs incurred to support all business segments, including
finance and procurement, corporate services, human resources, information
technology, public affairs, legal, marketing, and corporate communications.

The objective of the EBT measurement is to provide clarity on the profitability
of each segment and, ultimately, to hold leadership of each business segment
accountable for their allocated share of CSS costs. Segment results are not
necessarily indicative of the results of operations that would have occurred had
each segment been an independent, stand-alone entity during
                                       33

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

the periods presented. Certain costs are not attributable to any segment and remain unallocated in CSS, including costs for investor relations, public affairs and certain executive compensation.


Our FMS segment leases revenue earning equipment, as well as provides rental
vehicles, fuel, maintenance and other ancillary services to the SCS and DTS
segments. EBT related to inter-segment equipment and services billed to SCS and
DTS customers (equipment contribution) are included in both FMS and the segment
that served the customer and then eliminated upon consolidation (presented as
"Eliminations"). Inter-segment EBT allocated to SCS and DTS includes earnings
related to equipment used in providing services to SCS and DTS customers.

The following table sets forth the benefits from equipment contribution included in EBT for our SCS and DTS business segments:

                                Three months ended September          Nine months ended September
                                             30,                                  30,                                 Change 2020/2019
                                   2020               2019               2020              2019            Three Months              Nine Months
                                                          (In thousands)
Equipment Contribution:
Supply Chain Solutions         $    4,380$  3,060$  12,178$ 18,718                43%                     (35)%
Dedicated Transportation
Solutions                           8,556             3,058             18,572            23,868                NM                      (22)%
Total (1)                      $   12,936$  6,118$  30,750$ 42,586                NM                      (28)%


-----------

(1)Total amount is included in FMS EBT.


The increase in SCS and DTS equipment contribution in the third quarter is
primarily related to a declining impact associated with the prior residual value
estimate changes on vehicles used to provide services to SCS and DTS customers
and a one-time benefit from a customer contract termination in DTS. For the nine
months ended September 30, 2020, the decrease in SCS and DTS equipment
contribution is primarily related to the higher impact associated with the prior
residual value estimate changes on vehicles used to provide services to SCS and
DTS customers.

Items excluded from our segment EBT measure and their classification within our Condensed Consolidated Statements of Earnings are as follows:

Three months ended September 30, Nine months ended September 30,

            Description                            Classification              2020                2019               2020                2019
                                                                                                       (In thousands)
Restructuring and other, net (1)            Revenue and Restructuring and  

$ (13,767)$ (5,234)$ (43,790)$ (13,757)

                                                  other items, net

ERP implementation costs (1)               Restructuring and other items,      (5,751)            (6,126)            (27,109)           (13,617)
                                                         net

                                            Miscellaneous (income) loss,
Gains on sale of properties (1)                          net                    3,733                  -               3,733             18,614
Other items impacting comparability, net                                      (15,785)           (11,360)            (67,166)            (8,760)
Non-operating pension costs                  Non-operating pension costs       (7,200)            (6,885)             (9,357)           (20,060)
                                                                           $  (22,985)$ (18,245)$  (76,523)$ (28,820)


-----------

(1)See Note 16, "Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements for additional information.

                                       34

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

Fleet Management Solutions

                                     Three months ended September 30,                 Nine months ended September 30,                        Change
2020/2019
                                         2020                    2019                    2020                    2019             Three Months              Nine Months
                                                                      (In thousands)
ChoiceLease                      $         788,179          $   770,719$       2,346,546$ 2,268,048                2%                        3%
SelectCare                                 128,373              133,434                    390,370              405,572               (4)%                      (4)%
Commercial rental                          220,076              262,976                    595,013              752,995               (16)%                    (21)%
Other                                       16,738               22,456                     52,496               68,681               (25)%                    (24)%
Fuel services                              138,880              198,669                    429,468              618,906               (30)%                    (31)%
ChoiceLease liability insurance
(1)                                          4,971                9,092                     21,738               25,653               (45)%                    (15)%
FMS total revenue (2)            $       1,297,217$ 1,397,346$       3,835,631$ 4,139,855               (7)%                      (7)%

FMS operating revenue (3)        $       1,153,366$ 1,189,585$       3,384,425$ 3,495,296               (3)%                      (3)%

FMS EBT                          $          16,152          $  (108,550)$        (202,157)$    10,107                NM                        NM

FMS EBT as a % of FMS total
revenue                                  1.2%                   (7.8)%                  (5.3)%                   0.2%                900 bps                 (550) bps

FMS EBT as a % of FMS operating
revenue (3)                              1.4%                   (9.1)%                  (6.0)%                   0.3%               1,050 bps                (630) bps


------------
(1)In the first quarter of 2020, we announced our plan to exit the extension of
our liability insurance coverage for ChoiceLease customers. The exit of this
program is estimated to be completed in the second quarter of 2021. We have
revised our definition of operating revenue to exclude the revenues associated
with this program for better comparability of our on-going operations.
(2)Includes intercompany fuel sales from FMS to SCS and DTS.
(3)Non-GAAP financial measures. Reconciliations of FMS total revenue to FMS
operating revenue and FMS EBT as a % of FMS total revenue to FMS EBT as a % of
FMS operating revenue, as well as the reasons why management believes these
measures are important to investors are included in the "Non-GAAP Financial
Measures" section of this MD&A.

The following table summarizes the components of the change in FMS revenue on a percentage basis versus the prior year:

                                                      Three months ended September 30, 2020                            Nine months ended September 30, 2020
                                                  Total                               Operating (1)                  Total                          Operating (1)
Organic including price and volume                (3)%                                    (3)%                       (2)%                                (3)%
FMS fuel                                          (4)%                                     -%                        (5)%                                 -%

Net increase (decrease)                           (7)%                                    (3)%                       (7)%                                (3)%


------------
(1)Non-GAAP financial measure. A reconciliation of FMS total revenue to FMS
operating revenue as well as the reasons why management believes this measure is
important to investors is included in the "Non-GAAP Financial Measures" section
of this MD&A.

FMS total revenue decreased to $1.3 billion in the third quarter and $3.8
billion for the nine months ended September 30, 2020 primarily due to lower fuel
services and commercial rental revenues, partially offset by higher ChoiceLease
revenue. FMS operating revenue decreased to $1.2 billion in the third quarter
and $3.4 billion for the nine months ended September 30, 2020 primarily from
declines in commercial rental as demand was impacted from COVID-19, particularly
in the second quarter of 2020, partially offset by higher pricing in
ChoiceLease.

ChoiceLease revenue increased 2% in the third quarter and 3% for the nine months
ended September 30, 2020 primarily due to higher prices on vehicles. In
addition, ChoiceLease revenue also increased for the nine months ended September
30, 2020 due to larger average fleet size partially offset by lower revenue
based on mileage. SelectCare revenue decreased 4% in both the third quarter and
the nine months ended September 30, 2020 due to lower volumes. Commercial rental
revenue decreased 16% in the third quarter and 21% in the nine months ended
September 30, 2020 primarily due to lower demand (see further discussion below).
Commercial rental revenue for the nine months ended September 30, 2020 included
an estimated negative impact in the first half of 2020 from COVID-19 of
approximately $70 million. Fuel services revenue decreased 30% in the third
quarter and
                                       35

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

31% in the nine months ended September 30, 2020 primarily reflecting lower fuel costs passed through to customers and lower gallons sold.

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

                                 Three months ended September 30,       Nine months ended September 30,                    Change 2020/2019
                                     2020                2019               2020                2019            Three Months              Nine Months
                                                   (In thousands, except fleet count)
Rental revenue from non-lease
customers                        $  150,446$ 163,401$  386,996$ 445,150               (8)%                     (13)%
Rental revenue from lease
customers (1)                    $   69,630$  99,575$  208,017$ 307,845               (30)%                    (32)%
Average commercial rental power
fleet size - in service (2) (3)     30,400              37,500             31,700              36,100               (19)%                    (12)%
Commercial rental utilization -
power fleet (2)                      70.8%              74.0%               63.7%              74.7%              (320) bps               (1,100) bps


------------
(1)Represents revenue from rental vehicles provided to our existing ChoiceLease
customers, generally in place of a lease vehicle.
(2)Number of units rounded to nearest hundred and calculated using quarterly
average unit counts.
(3)Excluding trailers.

FMS EBT increased to earnings of $16 million in the third quarter of 2020 from a
loss of $109 million in the prior year period. The increase of FMS EBT was
primarily due to declining depreciation expense impacts from prior residual
value estimate changes and improved used vehicle sales totaling $108 million as
compared to prior year period. In addition, lease results increased in the third
quarter as a result of higher prices on vehicles and lower maintenance costs,
including benefits from our cost-savings initiatives. These increases were
partially offset by lower commercial rental results, which was negatively
impacted by lower demand on a smaller fleet. Rental power fleet utilization
decreased to 70.8% for the third quarter as noted in the table above.

For the nine months ended September 30, 2020, FMS EBT decreased to a loss of
$202 million from earnings of $10 million in the prior year period primarily due
to higher depreciation expense impacts from prior residual value estimate
changes, which resulted in negative year-over-year EBT impact of $139 million.
The nine months ended September 30, 2020 also included a negative impact in the
first half of the year of approximately $70 million due to lower rental demand
and higher credit loss reserves related to COVID-19. Rental power fleet
utilization decreased to 63.7% in the nine months ended September 30, 2020 as
noted in the table above. Since the end of the first quarter, commercial rental
demand has been negatively impacted by COVID-19 as discussed further below.
However, utilization increased throughout the third quarter due to improving
economic conditions and actions taken to reduce the rental fleet size. These
negative impacts were partially offset by COVID-19-related cost actions,
including temporary employee furloughs in the second quarter, as well as lower
medical expenses. In addition, lease results increased for the nine months ended
September 30, 2020 primarily due to higher prices on vehicles and lower
maintenance costs, including benefits from our cost-savings initiatives.

In the first half of 2020, we performed a review of the estimated residual
values of our FMS revenue earning equipment for both accelerated and policy
depreciation primarily due to the COVID-19 pandemic and the impact on current
and expected used vehicle market conditions, including our expectation on a
delayed recovery in the used vehicle market beyond our previous expectation of
mid-2021. Refer to "Critical Accounting Estimates" below and Note 5, "Revenue
Earning Equipment, net" in the Condensed Consolidated Financial Statements for
additional information.

As a result of the COVID-19 pandemic, demand for commercial rental vehicles was
significantly impacted in the second quarter due to a substantial reduction in
business activity. We took actions to reduce the rental fleet size, and redeploy
rental vehicles to fulfill new lease contracts and support the SCS and DTS
segments. ChoiceLease operations have not been materially impacted to date by
the pandemic, however we expect lower lease sales activity for the remainder of
2020 as compared to the prior year.
                                       36

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

Our global fleet of owned and leased revenue earning equipment and SelectCare vehicles, including vehicles under on-demand maintenance, is summarized as follows (number of units rounded to the nearest hundred):

                                                                                                                                         Change
                                                                                                                            Sept 2020/            Sept 2020/
                                           September 30, 2020         December 31, 2019         September 30, 2019           Dec. 2019             Sept 2019
End of period vehicle count
By type:
Trucks (1)                                           79,400                    85,200                     86,000               (7)%                  (8)%
Tractors (2)                                         75,400                    82,400                     82,300               (8)%                  (8)%
Trailers (3)                                         44,000                    45,400                     45,600               (3)%                  (4)%
Other                                                   800                       800                      1,000                -%                   (20)%
Total                                               199,600                   213,800                    214,900               (7)%                  (7)%

By product line:
ChoiceLease                                         150,900                   159,800                    160,200               (6)%                  (6)%
Commercial rental                                    35,400                    41,900                     44,800               (16)%                 (21)%
 Service vehicles and other                           2,600                     2,700                      2,600               (4)%                   -%
                                                    188,900                   204,400                    207,600               (8)%                  (9)%
Held for sale                                        10,700                     9,400                      7,300                14%                   47%
Total                                               199,600                   213,800                    214,900               (7)%                  (7)%

Customer vehicles under SelectCare
contracts (4)                                        55,000                    55,800                     56,800               (1)%                  

(3)%


Quarterly average vehicle count
By product line:
ChoiceLease                                         152,400                   160,200                    159,000               (5)%                  (4)%
Commercial rental                                    36,000                    43,300                     45,200               (17)%                 (20)%
Service vehicles and other                            2,600                     2,700                      2,700               (4)%                  (4)%
                                                    191,000                   206,200                    206,900               (7)%                  (8)%
Held for sale                                        12,800                     8,200                      7,700                56%                   66%
Total                                               203,800                   214,400                    214,600               (5)%                  (5)%

Customer vehicles under SelectCare
contracts (4)                                        56,500                    56,900                     56,400               (1)%                   

-%

Customer vehicles under SelectCare
on-demand (5)                                         6,200                     8,500                      8,300               (27)%                 (25)%
Total vehicles serviced                             266,500                   279,800                    279,300               (5)%                  (5)%

Year-to-date average vehicle count
By product line:
ChoiceLease                                         156,300                   156,600                    154,900                -%                    1%
Commercial rental                                    38,200                    44,100                     44,100               (13)%                 (13)%
Service vehicles and other                            2,700                     2,700                      2,700                -%                    -%
                                                    197,200                   203,400                    201,700               (3)%                  (2)%
Held for sale                                        12,000                     7,800                      7,600                54%                   58%
Total                                               209,200                   211,200                    209,300               (1)%                   -%

Customer vehicles under SelectCare
contracts (4)                                        55,200                    56,300                     55,500               (2)%                  

(1)%

Customer vehicles under SelectCare
on-demand (5)                                        15,400                    23,200                     19,400               (34)%                 (21)%
Total vehicle serviced                              279,800                   290,700                    284,200               (4)%                  (2)%



-----------
(1)Generally comprised of Class 1 through Class 7 type vehicles with a Gross
Vehicle Weight (GVW) up to 33,000 pounds.
(2)Generally comprised of over the road on highway tractors and are primarily
comprised of Class 8 type vehicles with a GVW of over 33,000 pounds.
(3)Generally comprised of dry, flatbed and refrigerated type trailers.
(4)Excludes customer vehicles under SelectCare on-demand contracts.
(5)Comprised of the number of unique vehicles serviced under on-demand
maintenance agreements for the quarterly periods. This does not represent
averages for the periods. Vehicles included in the count may have been serviced
more than one time during the respective period.
Note: Quarterly and year-to-date amounts were computed using a 6-point average
based on monthly information.
                                       37

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

The following table provides information on our active fleet (number of units rounded to nearest hundred):

                                                                                                                  Change
                                    September 30,         December 31,        September 30,          Sept 2020/            Sept 2020/
                                         2020                 2019                 2019               Dec. 2019             Sept 2019
End of period vehicle count
Active ChoiceLease vehicles (1)         143,400              147,400              146,000               (3)%                  (2)%

Quarterly average vehicle count
Active ChoiceLease vehicles (1)         144,100              146,900              145,200               (2)%                  (1)%
Revenue per active ChoiceLease
vehicle (2)                         $     5,500$     5,500$     5,300                -%                    4%


-----------
(1)Active ChoiceLease vehicles are calculated as those units currently earning
revenue and not classified as not yet earning or no longer earning units.
(2)Calculated based on the reported quarterly ChoiceLease revenue.
Note: Quarterly and year-to-date amounts were computed using a 6-point average
based on monthly information.

The following table provides a breakdown of our non-revenue earning equipment
included in our end of period global fleet count (number of units rounded to
nearest hundred):
                                                                                                                                    Change
                                                                                                                       Sept 2020/            Sept 2020/
                                      September 30, 2020         December 31, 2019         September 30, 2019           Dec. 2019             Sept 2019
Not yet earning revenue (NYE)                    1,100                     3,500                      4,400               (69)%                 (75)%

No longer earning revenue (NLE):
Units held for sale                             10,700                     9,400                      7,300                14%                   47%
Other NLE units                                  4,800                     8,400                     10,100               (43)%                 (52)%
Total NLE                                       15,500                    17,800                     17,400               (13)%                 (11)%
Total                                           16,600                    21,300                     21,800               (22)%                 (24)%



NYE units represent new vehicles on hand that are being prepared for deployment
to a lease customer or into the rental fleet. Preparations include activities
such as adding lift gates, paint, decals, cargo area and refrigeration
equipment. NYE units decreased 75% compared to September 30, 2019 reflecting
lower lease sales.

NLE units represent vehicles held for sale and vehicles for which no revenue has
been earned in the previous 30 days. Accordingly, these vehicles may be
temporarily out of service, being prepared for sale or awaiting redeployment.
NLE units decreased compared to September 30, 2019 as we have a higher number of
units held for sale offset by lower number of units being prepared for sale or
redeployment.


                                       38

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

Supply Chain Solutions

                              Three months ended September 30,            Nine months ended September 30,                        Change 2020/2019
                                  2020                2019                   2020                    2019             Three Months              Nine Months
                                                   (In thousands, except vehicle counts)

Automotive                    $  181,962$ 170,352          $         462,822          $   528,859                7%                      (12)%
Technology and healthcare         55,285             58,858                    167,901              208,961               (6)%                     

(20)%

Consumer product goods and
retail                           205,711            179,698                    590,430              543,664                14%                       9%
Industrial and other              49,330             44,803                    143,503              132,072                10%                       9%
Subcontracted transportation     172,003            136,914                    409,939              400,424                26%                       2%
Fuel                              21,124             26,975                     58,585               88,602               (22)%                    (34)%
SCS total revenue             $  685,415$ 617,600$       1,833,180$ 1,902,582                11%                      (4)%

SCS operating revenue (1) $ 492,288$ 453,711 $

 1,364,656          $ 1,413,556                9%                       (3)%

SCS EBT                       $   57,848$  34,595          $         125,789          $   112,686                67%                      12%
SCS EBT as a % of SCS total
revenue                           8.4%                5.6%                   6.9%                    5.9%                280 bps                  100 bps
SCS EBT as a % of SCS
operating revenue (1)             11.8%               7.6%                   9.2%                    8.0%                420 bps                  120 bps

Memo:
Average fleet                      9,600              9,700                      9,600                9,700               (1)%                      (1)%


------------

(1)Non-GAAP financial measures. Reconciliations of SCS total revenue to SCS operating revenue and SCS EBT as a % of SCS total revenue to SCS EBT as a % of SCS operating revenue, as well as the reasons why management believes these measures are important to investors are included in the "Non-GAAP Financial Measures" section of this MD&A.

The following table summarizes the components of the change in SCS revenue on a percentage basis versus the prior year:

                                                          Three months ended September 30, 2020                            Nine months ended September 30, 2020
                                                      Total                               Operating (1)                  Total                          Operating (1)
Organic including price and volume                     7%                                      10%                       (2)%                                (2)%
Subcontracted transportation                           6%                                      -%                         1%                                  -%

Foreign exchange                                      (1)%                                    (1)%                       (1)%                                (1)%
Fuel                                                  (1)%                                     -%                        (2)%                                 -%
Net increase (decrease)                                11%                                     9%                        (4)%                                (3)%


------------

(1)Non-GAAP financial measure. A reconciliation of SCS total revenue to SCS operating revenue, as well as the reasons why management believes this measure is important to investors is included in the "Non-GAAP Financial Measures" section of this MD&A.


SCS total revenue and operating revenue (a non-GAAP measure excluding fuel and
subcontracted transportation) increased 11% and 9%, respectively, in the third
quarter of 2020 primarily due to new business, higher volume and increased
pricing. We experienced increased volumes in our automotive vertical during the
third quarter as a result of higher production support activity following the
shutdowns in the first half of 2020, as well as increased volumes related to
COVID-19 activity in our consumer packaged goods vertical and in our last mile
business. SCS total revenue and operating revenue decreased 4% and 3%,
respectively, in the nine months ended September 30, 2020 primarily due to lower
activity in our automotive vertical as a result of production shutdowns related
to the COVID-19 pandemic, partially offset by increased pricing, higher volumes
and new business in several verticals. The nine months ended September 30, 2020
included estimated negative COVID-19 related impacts of approximately $70
million in the first half of 2020, primarily due to shutdowns in our automotive
vertical.

SCS EBT increased 67% in the third quarter primarily due to new business, higher
pricing and improved operating performance. For the nine months ended September
30, 2020, SCS EBT increased 12% due to improved operating performance and higher
pricing, partially offset by first half of 2020 estimated impacts of COVID-19 of
approximately $35 million,
                                       39

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

particularly due to the temporary shutdowns in our automotive vertical. In addition, EBT was impacted by a decrease in equipment contribution of $7 million for the nine months ended September 30, 2020 (see further discussions on equipment contribution above).

In the second quarter, our automotive customers resumed production and are generally operating at above pre-COVID levels as of the end of the third quarter, however volumes may be impacted in the future based on customer production schedules and other economic impacts and recovery in the consumer market.

Dedicated Transportation Solutions

                           Three months ended September 30,           Nine months ended September 30,                       Change 2020/2019
                               2020                2019                  2020                   2019             Three Months              Nine Months
                                               (In thousands, except vehicle counts)
DTS total revenue          $  299,680$ 359,211$       928,512$ 1,071,076               (17)%                    (13)%

DTS operating revenue (1)  $  233,629$ 247,715$       698,245$   731,399               (6)%                      (5)%

DTS EBT                    $   24,728$  18,490$        58,141$    63,034                34%                      (8)%
DTS EBT as a % of DTS
total revenue                  8.3%                5.1%                  6.3%                   5.9%                320 bps                   40 bps

DTS EBT as a % of DTS
operating revenue (1)          10.6%               7.5%                  8.3%                   8.6%                310 bps                  (30) bps

Memo:

Average fleet                   9,300              9,600                    9,400                9,600               (3)%                      (2)%


------------

(1)Non-GAAP financial measures. Reconciliations of DTS total revenue to DTS operating revenue and DTS EBT as a % of DTS total revenue to DTS EBT as a % of DTS operating revenue, as well as the reasons why management believes these measures are important to investors are included in the "Non-GAAP Financial Measures" section of this MD&A.

The following table summarizes the components of the change in DTS revenue on a percentage basis versus the prior year:

                                                          Three months ended September 30, 2020                            Nine months ended September 30, 2020
                                                      Total                               Operating (1)                  Total                          Operating (1)
Organic including price and volume                    (4)%                                    (6)%                       (2)%                                (5)%
Subcontracted transportation                          (10)%                                    -%                        (8)%                                 -%
Fuel                                                  (3)%                                     -%                        (3)%                                 -%
Net increase (decrease)                               (17)%                                   (6)%                       (13)%                               (5)%


------------
(1)Non-GAAP financial measure. A reconciliation of DTS total revenue to DTS
operating revenue, as well as the reasons why management believes this measure
is important to investors is included in the "Non-GAAP Financial Measures"
section of this MD&A.
DTS total revenue decreased 17% in the third quarter and 13% in the nine months
ended September 30, 2020 due to lower subcontracted transportation, fuel and
operating revenue (a non-GAAP measure excluding fuel and subcontracted
transportation). DTS operating revenue decreased 6% in the third quarter and 5%
in the nine months ended September 30, 2020 primarily reflecting non-renewed
business and lower volumes.

DTS EBT increased 34% in third quarter primarily due to a declining impact
associated with prior residual value estimate changes, a one-time benefit from a
customer contract termination, and improved operating performance. DTS EBT
decreased 8% in the nine months ended September 30, 2020 primarily due to
additional depreciation expense from prior residual value estimate changes and
higher overheads partially offset by improved operating performance.

                                       40

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
Central Support Services
                                  Three months ended September
                                               30,                     Nine months ended September 30,                   Change 2020/2019
                                     2020               2019               2020               2019            Three Months              Nine Months
                                                            (In thousands)
Human resources                  $    4,868$  5,124$  15,372$  15,747               (5)%                      (2)%
Finance and procurement              17,020            18,584             52,766             55,004               (8)%                      (4)%
Corporate services and public
affairs                               1,716             1,596              5,426              6,264                8%                      (13)%
Information technology               19,391            20,179             56,817             61,178               (4)%                      (7)%
Legal and safety                      6,853             6,319             21,328             19,996                8%                        7%
Marketing                             6,861             6,014             15,791             16,218                14%                      (3)%
Other                                 8,132             9,461             24,934             27,531               (14)%                     (9)%
Total CSS                            64,841            67,277            192,434            201,938               (4)%                      (5)%
Allocation of CSS to business
segments                            (56,799)          (55,845)          (164,288)          (167,477)               2%                       (2)%
Unallocated CSS                  $    8,042$ 11,432$  28,146$  34,461               (30)%                    (18)%



Total CSS costs decreased 4% in the third quarter. For the nine months ended
September 30, 2020, total CSS costs decreased 5% due to certain cost reduction
strategies initiated during the second quarter as a response to COVID-19,
including lower compensation related expenses and lower discretionary, travel
and marketing spend. Unallocated CSS decreased by $3 million in the third
quarter and $6 million in the nine months ended September 30, 2020 due to lower
compensation related expenses and cost reduction strategies initiated in the
second quarter.
                                       41

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

FINANCIAL RESOURCES AND LIQUIDITY


Cash Flows
The following is a summary of our cash flows from continuing operations:
                                                                       Nine 

months ended September 30,

                                                                          2020                    2019
                                                                               (In thousands)
Net cash provided by (used in):
Operating activities                                              $       1,696,589$ 1,589,186
Investing activities                                                       (484,419)          (2,553,763)
Financing activities                                                       (603,715)             976,560
Effect of exchange rate changes on cash                                       2,866               (3,254)
Net change in cash and cash equivalents                           $         611,321          $     8,729

                                                                       Nine months ended September 30,
                                                                          2020                    2019
                                                                               (In thousands)
Net cash provided by operating activities
Earnings (loss) from continuing operations                        $        (137,749)$    29,804
Non-cash and other, net                                                   1,729,534            1,596,955
Collections on sales-type leases                                             85,662               89,995
Changes in operating assets and liabilities:
Receivables                                                                   6,646              (17,784)
Accounts payable                                                            (14,733)             (30,241)
Changes in other assets and liabilities                                      27,229              (79,543)

Cash flows from operating activities from continuing operations $ 1,696,589$ 1,589,186




Cash provided by operating activities increased to $1.7 billion in the nine
months ended September 30, 2020 compared with $1.6 billion in 2019, reflecting
lower working capital needs. Our working capital needs are primarily driven by
the timing of collections of our receivables and payments of our trade payables,
as well as other changes in operating assets and liabilities. The impact in
receivables was primarily due to lower revenues as a result of COVID-19
partially offset by the extension of credit terms for certain customers. The
impact from trade payables was primarily due to lower spend. In addition, the
favorable impact from changes in other assets and liabilities was driven by
lower payments related to salaries and wages and a decrease in inventories in
2020. Cash used in investing activities decreased to $484 million in the nine
months ended September 30, 2020 compared with $2.6 billion in 2019, primarily
due to a decrease in capital expenditures as a result of lower ChoiceLease sales
and rental activity. Cash provided by (used in) financing activities decreased
to ($604) million in the nine months ended September 30, 2020 compared with $977
million in 2019 due to increased debt repayments and lower debt borrowings.
                                       42

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

The following table shows our free cash flow computation:

                                                                   Nine months ended September 30,
                                                                      2020                    2019
                                                                           (In thousands)
Net cash provided by operating activities                     $       1,696,589$ 1,589,186
Sales of revenue earning equipment (1)                                  390,767              353,743

Sales of operating property and equipment (1)                             9,918               49,726

Total cash generated (2)                                              2,097,274            1,992,655
Purchases of property and revenue earning equipment (1)                (879,400)          (2,957,232)
Free cash flow (2)                                            $       1,217,874$  (964,577)


-----------
(1)Included in cash flows from investing activities.
(2)Non-GAAP financial measures. Reconciliations of net cash provided by
operating activities to total cash generated and to free cash flow are set forth
in this table. Refer to the "Non-GAAP Financial Measures" section of this MD&A
for the reasons why management believes these measures are important to
investors.


Free cash flow increased to $1.2 billion in the nine months ended September 30,
2020 from negative $1.0 billion in 2019 primarily due to lower capital
expenditures and, to a lesser extent, higher cash flows from operations in 2020.
We expect an increase of free cash flow through the remainder of 2020 as a
result of lower capital expenditures based on lower ChoiceLease sales and rental
activity related to COVID-19 and our strategy to improve our returns, as well as
improved cash flows from operating activities.

Capital expenditures generally represent the purchase of revenue earning
equipment (trucks, tractors and trailers) within our FMS segment. These
expenditures primarily support the ChoiceLease and commercial rental product
lines. The level of capital required to support the ChoiceLease product line
varies based on customer contract signings for replacement vehicles and growth.
These contracts are long-term agreements that result in predictable cash flows
typically over three to seven years for trucks and tractors and ten years for
trailers. We utilize capital for the purchase of vehicles in our commercial
rental product line to replenish and expand the fleet available for shorter-term
use by contractual or occasional customers. Operating property and equipment
expenditures primarily relate to spending on items such as vehicle maintenance
facilities and equipment, computer and telecommunications equipment, investments
in technologies, and warehouse facilities and equipment.

The following table provides a summary of capital expenditures:

                                                                      Nine 

months ended September 30,

                                                                         2020                   2019
                                                                              (In thousands)
Revenue earning equipment:
ChoiceLease                                                       $       601,326$ 2,311,491
Commercial rental                                                          73,466              551,062
                                                                          674,792            2,862,553
Operating property and equipment                                           90,164              136,451
Total capital expenditures                                                764,956            2,999,004

Changes in accounts payable related to purchases of revenue earning equipment

                                                         114,444              (41,772)

Cash paid for purchases of property and revenue earning equipment $ 879,400$ 2,957,232




Capital expenditures decreased 74% to $765 million in the nine months ended
September 30, 2020 reflecting lower investments in the ChoiceLease and rental
fleets as a result of reduced sales activity and rental demand. In relation to
the COVID-19 pandemic, we cancelled or postponed vehicle orders in the second
quarter where possible, which has significantly reduced capital expenditures
during 2020. In September 2020, we began to reinstate some of the postponed
vehicle orders, however we expect these vehicles to be delivered late in 2020
and into 2021.
                                       43

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

Financing and Other Funding Transactions


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

Cash and cash equivalents totaled $684 million as of September 30, 2020. As of
September 30, 2020, approximately $67 million was held outside the U.S. and is
available to fund operations and other growth of non-U.S. subsidiaries. If we
decide to repatriate cash and cash equivalents held outside the U.S., we may be
subject to additional income taxes and foreign withholding taxes. However, our
intent is to permanently reinvest these foreign amounts outside the U.S. and our
current plans do not demonstrate a need to repatriate these foreign amounts to
fund our U.S. operations.

We believe that our operating cash flows, together with our access to the public
unsecured bond market, commercial paper market and other available debt
financing, will be adequate to meet our operating, investing and financing needs
in the foreseeable future. However, there can be no assurance that volatility
and disruption in the public unsecured debt market or the commercial paper
market would not impair our ability to access these markets on terms
commercially acceptable to us or at all. If we cease to have access to public
bonds, commercial paper and other sources of unsecured borrowings, we would meet
our liquidity needs by drawing upon contractually committed lending agreements
and/or by seeking other funding sources. In the second quarter of 2020, we also
amended our net worth covenant in our revolving credit facility and other debt
instruments to enable more flexibility under the covenant. Refer to Note 10,
"Debt," in the Notes to Condensed Consolidated Financial Statements for
information on our net worth covenant amendment and further discussion around
the global revolving credit facility, the trade receivables program, the
issuance of medium-term notes under our shelf registration statement,
asset-backed financing obligations and debt maturities.

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

Our debt ratings and rating outlooks at September 30, 2020 were as follows:

Rating Summary

                                      Short-term                 Short-term Outlook                      Long-term                Long-term Outlook
Standard & Poor's Ratings
Services                                  A2                           Stable                               BBB                        Stable
Moody's Investors Service                 P2                           Stable                               Baa2                       Stable
Fitch Ratings                             F2                           Stable                               BBB+                      Negative
DBRS                                  R-1 (Low)                       Negative                            A (Low)                     Negative


As of September 30, 2020, we had the following amounts available to fund operations under the following facilities:

                                     (In millions)

Global revolving credit facility $ 1,248 Trade receivables program

           $          300



In accordance with our funding philosophy, we attempt to align the aggregate
average remaining re-pricing life of our debt with the aggregate average
remaining re-pricing life of our assets. We utilize both fixed-rate and
variable-rate debt to achieve this alignment and generally target a mix of 20% -
40% variable-rate debt as a percentage of total debt outstanding. The
variable-rate portion of our total debt (including notional value of swap
agreements) was 11% and 17% as September 30, 2020 and December 31, 2019,
respectively.

Our debt to equity ratio was 346% and 320% as of September 30, 2020 and
December 31, 2019, respectively. The debt to equity ratio represents total debt
divided by total equity. The increase is due to the reduction in equity related
to higher depreciation expense impacts from our prior residual value estimate
changes, higher cash balance due to the uncertainty of the
                                       44

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
economic environment, and impacts of a lower discount rate on our pension plans
that were remeasured in the third quarter (see further discussion below in
"Pension Information"). As of September 30, 2020, the debt to equity ratio
increased by 25 percentage points due to higher than normal cash balance in the
U.S. and increased by 10 percentage points as a result of the impact on equity
from the pension remeasurement.

Pension Information


The funded status of our pension plans is dependent upon many factors, including
returns on invested assets and the level of certain market interest rates. We
review pension assumptions regularly and we may, from time to time, make
voluntary contributions to our pension plans, which exceed the amounts required
by statute. In 2020, the expected total contributions to our pension plans are
approximately $76 million, which included additional contributions of
$38 million made during the third quarter. During the nine months ended
September 30, 2020, we contributed $74 million to our pension plans. On
September 30, 2020, our Board of Directors agreed to freeze our defined benefit
plans in the U.S. and Canada for certain previously grandfathered participants,
which required us to remeasure our benefit obligation and related accumulated
other comprehensive income amounts. See Note 15, "Employee Benefit Plans," in
the Notes to Condensed Consolidated Financial Statements for additional
information.

Share Repurchases and Cash Dividends


See Note 11, "Share Repurchase Programs," in the Notes to Condensed Consolidated
Financial Statements for a discussion of share repurchases. During the second
quarter, the share repurchase program was put on hold temporarily due to the
impact of COVID-19, however we intend to recommence the program in the fourth
quarter of 2020.

In July 2020, our Board of Directors declared quarterly cash dividends of $0.56
per share of common stock, which were paid during the third quarter. In October
2020, our Board of Directors declared a quarterly cash dividend of $0.56 per
share of common stock.


CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires us
to make estimates and assumptions. Certain of these policies require the
application of subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain. These
estimates and assumptions are based on historical experience, changes in the
business environment and other factors that we believe to be reasonable under
the circumstances. Different estimates that could have been applied in the
current period or changes in the accounting estimates that are reasonably likely
can result in a material impact on our financial condition and operating results
in the current and future periods.

The following discussion, which should be read in conjunction with the
descriptions in the Notes to Condensed Consolidated Financial Statements and our
Annual Report on Form 10-K, is furnished for additional insight into certain
accounting estimates that have been updated since our 2019 Annual Report. For
further discussion on our Critical Accounting Estimates and related policies,
refer to the "Critical Accounting Estimates" section of our 2019 Annual Report
on Form 10-K starting on page 48.

Depreciation and Residual Value Estimates. Depreciation on the vehicles in our
fleet is determined at the time of acquisition and is recognized over a
vehicle's useful life to its estimated residual value (i.e., the price at which
we ultimately expect to dispose of vehicles) to attempt to minimize gains or
losses upon sale in the used vehicle market.

We periodically review and adjust, as appropriate, the estimated residual values
and useful lives of existing revenue earning equipment for the purposes of
recording depreciation expense as described in Note 5, "Revenue Earning
Equipment, net," in the Notes to Condensed Consolidated Financial Statements.
Our review of the estimated residual values and useful lives of revenue earning
equipment is established with a long-term view, which we refer to as "policy
depreciation," based on vehicle class, generally subcategories of trucks,
tractors and trailers by weight and usage, as well as other factors. These other
factors include, but are not limited to, historical market prices, current and
expected future market prices, expected lives of vehicles, and expected sales of
used vehicles in the wholesale and retail markets. Reductions in estimated
residual values or useful lives will result in an increase in depreciation
expense over the remaining useful life of the vehicle.
                                       45

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

We also assess estimates of residual values of vehicles expected to be made available for sale in the near-term (generally 12 to 24 months) based on near-term market rates and conditions and may adjust residual values for these vehicles, which we refer to as "accelerated depreciation."


Due to the COVID-19 pandemic and the impact on current and expected used vehicle
market conditions, we performed a review of the estimated residual values of our
FMS revenue earning equipment in the second quarter of 2020 for both accelerated
and policy depreciation. We did not have any further changes to our residual
value estimates in the third quarter of 2020. For the three and nine months
ended September 30, 2020, we recognized policy and accelerated depreciation
impacts totaling $100 million and $405 million, respectively, related to prior
residual value estimate changes in 2019 and 2020. The amounts included below
only reflect the impacts from the estimate changes that occurred in the first
and second quarters of 2020.
Accelerated Depreciation
In the first quarter of 2020, we revised our residual value estimates for
vehicles that are expected to be sold in the near-term (through mid-2021) and
recorded valuation adjustments on our vehicles held for sale due to the expected
negative impacts of the COVID-19 pandemic on pricing and volume of used vehicle
sales. At that time, we expected lower used vehicle pricing in the second half
of 2020 due to lower demand rather than our previous expectations of a modest
increase. In the second quarter of 2020, we further revised our residual value
estimates to reflect an expected delayed recovery in the used vehicle market
beyond mid-2021 and thus extended accelerated depreciation by an additional year
to now include vehicles expected to be sold through mid-2022. As a result of
these changes in estimated residual values, we recorded additional accelerated
depreciation in the third quarter of 2020 of $23 million, which included net
gains of $13 million for used vehicle sales results. For the nine months ended
September 30, 2020, we recorded additional accelerated depreciation of
$133 million, which included net losses of $17 million for used vehicle sales
results.

As a result of these changes, our accelerated depreciation residual value levels
for both tractors and trucks, which include the impacts of COVID-19, are
currently below our average annual used vehicle pricing for each year in the
last 20 years. These average annual used vehicle pricing levels are calculated
based on used vehicle prices as a percentage of our original vehicle investment
(cost).
Policy Depreciation
In the second quarter of 2020, as a result of the expected negative impacts on
pricing and volumes related to COVID-19 and our lowered longer term outlook, we
concluded that our residual value estimates likely exceeded the expected future
values that would be realized upon the sale of vehicles in our fleet for
vehicles expected to be sold after mid-2022. Therefore, we lowered our estimated
residual values primarily for our truck fleet, and to a lesser extent, our
tractor fleet, effective April 1, 2020. In evaluating our residual value
estimates, we reviewed recent multi-year trends; management and third-party
longer-term outlook for the used vehicle market, including impacts of COVID-19
and the demand and pricing of our used vehicles; expected sales volumes through
our retail and wholesale channels; inventory levels; and other factors that
management deemed necessary to appropriately reflect our expected long-term
sales proceeds. In the three and nine months ended September 30, 2020, we
recorded additional policy depreciation of $18 million and $36 million,
respectively. The impact of the policy depreciation estimate change in the
second quarter of 2020 as a percentage of our original vehicle investment was
approximately 3%.
Policy Depreciation Sensitivity
Based on our fleet of revenue earning equipment as of the end of the third
quarter, a hypothetical additional 10% reduction in estimated residual values
used for policy depreciation would increase depreciation expense over the
remaining life of these vehicles by approximately $280 million. Our average
annual used vehicle pricing as a percentage of our original vehicle investment
has been above policy depreciation residual value levels for trucks 19 out of
the last 20 years and for tractors 17 out of the last 20 years.
While we believe that the carrying values and estimated sales proceeds for
revenue earning equipment are reasonable, there can be no assurance that
deterioration in economic conditions or adverse changes to expectations of
future sales proceeds will not occur, resulting in losses on sales or revisions
to residual value estimates. While management believes that current estimates
are reasonable given our current outlook, if our used vehicle sales pricing as a
percentage of our original vehicle investment does not improve, we will likely
be required to lower residual value estimates even further which may have a
material adverse effect on our financial results. Factors that could cause
actual results to materially differ from estimates include, but are not limited
to, changes in supply and demand; changes in technology; competitor pricing;
regulatory requirements; driver shortages, requirements and preferences; and
changes in underlying assumption factors. As a result, future residual value
estimates and resulting depreciation expense are subject to change based upon
changes in these factors.
                                       46

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

Earnings Impact From Residual Value Estimate Changes The following table includes the earnings impact on depreciation from the changes in residual value estimates in 2019 and 2020 based on the respective fleet at the time of each change.

                                                                                     Three months ended
                                           September 30,         December 31,                                  June 30, 2020         September 30,
                                               2019                  2019               March 31, 2020              (2)                  2020
                                                                                        (in millions)
Accelerated Depreciation
(2019 - Q2 2020) (1)                      $        148          $         88          $           100          $        86          $         33

Policy Depreciation
(2019 - Q2 2020)                                    60                    60                       51                   68                    67

Total                                     $        208$        148          $           151          $       154$        100


-----------
(1) Accelerated depreciation included losses from used vehicles sales, net
(primarily valuation adjustments) of $23 million, $10 million, $21 million and
$9 million for the three months ended September 30, 2019, December 31, 2019,
March 31, 2020, and June 30, 2020, respectively. For the three months ended
September 30, 2020, accelerated depreciation is offset by gains related to used
vehicle sales of $13 million. Refer to Note 5, "Revenue Earning Equipment," in
the Notes to the Condensed Consolidated Financial Statements for further
information on used vehicle sales.
(2) Incremental depreciation expense was $35 million for the three months ended
June 30, 2019 including impacts from accelerated and policy depreciation and
losses for used vehicle sales, net.

Goodwill Impairment. We assess goodwill for impairment on October 1st of each
year or more often if deemed necessary. In the first quarter of 2020, we
performed an interim impairment test of our FMS North America reporting unit
("FMS NA") as a result of the decline in market conditions and our updated
outlook as a result of the impact of COVID-19. Our valuation of fair value for
FMS NA was determined based on a discounted future cash flow model (income
approach) and the application of current market multiples for comparable
publicly-traded companies (market approach). Based on our analysis, we
determined that FMS NA goodwill was not impaired as of March 31, 2020, however
the fair value was not substantially in excess of its carrying value. The
estimated fair value of the FMS NA reporting unit exceeded its carrying value by
approximately 5% as of March 31, 2020.

Given this level of fair value, in the event the financial performance of FMS NA
does not meet our expectations in the future; we experience future prolonged
market downturns, including in the used vehicle market or continued declines in
our stock price; negative trends from the COVID-19 pandemic continue; or there
are other negative revisions to key assumptions, we may be required to perform
additional impairment analyses and could be required to recognize a non-cash
goodwill impairment charge. As of March 31, 2020, we assessed that it was not
more likely than not that our SCS and DTS reporting units fair value was less
than its carrying value. As of September 30, 2020, there was $244 million of
goodwill recorded related to FMS NA. We determined that there have not been any
interim impairment trigger events since the first quarter of 2020.


RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2, "Recent Accounting Pronouncements," in the Notes to Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.

                                       47

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

NON-GAAP FINANCIAL MEASURES


This Quarterly Report on Form 10-Q includes information extracted from condensed
consolidated financial information but not required by generally accepted
accounting principles (GAAP) to be presented in the financial statements.
Certain elements of this information are considered "non-GAAP financial
measures" as defined by SEC rules. Non-GAAP financial measures should be
considered in addition to, but not as a substitute for or superior to, other
measures of financial performance or liquidity prepared in accordance with GAAP.
Also, our non-GAAP financial measures may not be comparable to financial
measures used by other companies. We provide a reconciliation of each of these
non-GAAP financial measures to the most comparable GAAP measure in this non-GAAP
financial measures section or in our results and liquidity discussions above. We
also provide the reasons why management believes each non-GAAP financial measure
is useful to investors in this section.

Specifically, we refer to the following non-GAAP financial measures in this Form 10-Q:

          Non-GAAP Financial Measure                        Comparable GAAP Measure
Operating Revenue Measures:
Operating Revenue                               Total Revenue
FMS Operating Revenue                           FMS Total Revenue
DTS Operating Revenue                           DTS Total Revenue
SCS Operating Revenue                           SCS Total Revenue
FMS EBT as a % of FMS Operating Revenue         FMS EBT as a % of FMS Total Revenue
SCS EBT as a % of SCS Operating Revenue         SCS EBT as a % of SCS Total Revenue
DTS EBT as a % of DTS Operating Revenue         DTS EBT as a % of DTS Total Revenue
Comparable Earnings Measures:
Comparable Earnings (Loss) Before Income Taxes  Earnings (Loss) Before Income Taxes
Comparable Earnings (Loss)                      Earnings (Loss) from Continuing Operations
Comparable EPS                                  EPS from Continuing Operations
Comparable Tax Rate                             Effective Tax Rate from Continuing Operations
Cash Flow Measures:
Total Cash Generated and Free Cash Flow         Cash Provided by Operating Activities








                                       48

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
Set forth in the table below is an overview of each non-GAAP financial measure
and why management believes that the presentation of each non-GAAP financial
measure provides useful information to investors. See reconciliations for each
of these measures following this table.
Operating Revenue Measures:
Operating Revenue                Operating revenue is defined as total revenue for Ryder System, Inc.
FMS Operating Revenue            or each business segment (FMS, SCS and DTS) excluding any (1) fuel
SCS Operating Revenue            and (2) subcontracted transportation, as well as (3) revenue from
DTS Operating Revenue            our ChoiceLease liability insurance

program which was discontinued

                                 in early 2020. We believe operating revenue provides useful
FMS EBT as a % of FMS Operating  information to investors as we use it to evaluate the operating
Revenue                          performance of our core businesses and as a measure of sales
SCS EBT as a % of SCS Operating  activity at the consolidated level for Ryder System, Inc., as well
Revenue                          as for each of our business segments. We also use segment EBT as a
DTS EBT as a % of DTS Operating  percentage of segment operating revenue for each business segment
Revenue                          for the same reason. Note: FMS EBT, SCS EBT and DTS EBT, our primary
                                 measures of segment performance, are not non-GAAP measures.

                                 Fuel: We exclude FMS, SCS and DTS fuel from the calculation of our
                                 operating revenue measures, as fuel is an ancillary service that we
                                 provide our customers, which is impacted by fluctuations in market
                                 fuel prices and the costs are largely a pass-through to our
                                 customers, resulting in minimal changes in our profitability during
                                 periods of steady market fuel prices. However, profitability may be
                                 positively or negatively impacted by rapid changes in market fuel
                                 prices during a short period of time, as customer pricing for fuel
                                 services is established based on trailing market fuel costs.

                                 Subcontracted transportation: We exclude subcontracted
                                 transportation from the calculation of our operating revenue
                                 measures, as these services are also

typically a pass-through to our

                                 customers and, therefore, fluctuations 

result in minimal changes to

                                 our profitability. While our SCS and DTS business segments
                                 subcontract certain transportation services to third party
                                 providers, our FMS business segment does

not engage in subcontracted

                                 transportation and, therefore, this item 

is not applicable to FMS.


                                 ChoiceLease liability insurance: We 

exclude ChoiceLease liability

                                 insurance as we announced our plan in the first quarter of 2020 to
                                 exit the extension of our liability insurance coverage for
                                 ChoiceLease customers. The exit of this program is estimated to be
                                 completed in the second quarter of 2021. We are excluding the
                                 revenues associated with this program for better comparability of
                                 our on-going operations.
Comparable Earnings Measures:
Comparable earnings (loss)       Comparable EBT, comparable earnings, comparable EPS are defined,
before income taxes (EBT)        respectively, as GAAP EBT, earnings, EPS, all from continuing
Comparable earnings (loss)       operations, excluding (1) non-operating pension costs and (2) any
Comparable earnings (loss) per   other significant items that are not representative of our business
diluted common share (EPS)       operations. We believe these comparable earnings measures provide
Comparable tax rate              useful information to investors and allow for better year-over-year
                                 comparison of operating performance.

                                 Non-Operating Pension Costs: Our comparable earnings measures
                                 exclude non-operating pension costs, which include the amortization
                                 of net actuarial loss and prior service cost, interest cost and
                                 expected return on plan assets components of pension and
                                 postretirement benefit costs, as well as a settlement or curtailment
                                 of a plan. We exclude non-operating pension costs because we
                                 consider these to be impacted by financial market performance and
                                 outside the operational performance of our business.

                                 Other Items Impacting Comparability: Our comparable and adjusted
                                 earnings measures also exclude other

significant items that are not

                                 representative of our business operations as detailed in the
                                 reconciliation table below. These other significant items vary from
                                 period to period and, in some periods, there may be no such
                                 significant items.

                                 Calculation of comparable tax rate: The comparable provision for
                                 income taxes is computed using the same methodology as the GAAP
                                 provision for income taxes. Income tax effects of non-GAAP
                                 adjustments are calculated based on the statutory tax rates of the
                                 jurisdictions to which the non-GAAP adjustments relate.


                                       49

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
Cash Flow Measures:
Total Cash Generated                    We consider total cash generated and free cash flow to be important
Free Cash Flow                          measures of comparative operating 

performance, as our principal

                                        sources of operating liquidity are 

cash from operations and proceeds

                                        from the sale of revenue earning 

equipment.

                                        Total Cash Generated: Total cash 

generated is defined as the sum of

                                        (1) net cash provided by operating 

activities, (2) net cash provided

                                        by the sale of revenue earning 

equipment, (3) net cash provided by

                                        the sale of operating property and 

equipment and (4) other cash

                                        inflows from investing activities. 

We believe total cash generated

                                        is an important measure of total cash flows generated from our
                                        ongoing business activities.
                                        Free Cash Flow: We refer to the net amount of cash generated from
                                        operating activities and investing activities (excluding
                                        acquisitions) from continuing

operations as "free cash flow." We

                                        calculate free cash flow as the sum 

of (1) net cash provided by

                                        operating activities, (2) net cash 

provided by the sale of revenue

                                        earning equipment and operating 

property and equipment, (3) other

                                        cash inflows from investing 

activities, less (4) purchases of

                                        property and revenue earning 

equipment. We believe free cash flow

                                        provides investors with an 

important perspective on the cash

                                        available for debt service and for 

shareholders, after making

                                        capital investments required to 

support ongoing business operations.

                                        Our calculation of free cash flow may be different from the
                                        calculation used by other companies and, therefore, comparability
                                        may be limited.
                                        * See Total Cash Generated and Free

Cash Flow reconciliations in the

                                        Financial Resources and Liquidity 

section of Management's Discussion

                                        and Analysis.


The following table provides a reconciliation of GAAP earnings (loss) before
taxes (EBT), earnings (loss), and earnings (loss) per diluted share (EPS) from
continuing operations to comparable EBT, comparable earnings (loss) and
comparable EPS from continuing operations for the three and nine months ended
September 30, 2020 and 2019. Certain items included in EBT, earnings and diluted
EPS from continuing operations have been excluded from our comparable EBT,
comparable earnings and comparable diluted EPS measures. The following table
lists a summary of these items, which are discussed in more detail throughout
our MD&A and within the Notes to Condensed Consolidated Financial Statements:
                                                         EBT                              Earnings (Loss)                        Diluted EPS
                                               2020                2019               2020                2019              2020             2019
Three months ended September 30,                                           (In thousands, except per share amounts)
Continuing operations (GAAP)               $   54,765$ (91,260)

$ 45,085$ (91,538)$ 0.85$ (1.75) Non-operating pension costs

                     7,200              6,885               4,660              4,919             0.09             0.09
Restructuring and other, net (1)               13,767              5,234              11,186              3,981             0.21             0.08
ERP implementation costs (1)                    5,751              6,126               4,269              4,540             0.08             0.09

Gains on sale of properties (1)                (3,733)                 -              (3,449)                 -            (0.06)               -
Tax adjustments (2)                                 -                  -               2,070                  -             0.04                -
Comparable (non-GAAP)                      $   77,750$ (73,015)$   63,821$ (78,098)$  1.21$ (1.49)

                                                         EBT                              Earnings (Loss)                        Diluted EPS
                                               2020                2019               2020                2019              2020             2019
Nine months ended September 30,                                            (In thousands, except per share amounts)
Continuing operations (GAAP)               $ (153,646)$  79,960

$ (137,749)$ 29,804$ (2.64)$ 0.56 Non-operating pension costs

                     9,357             20,060               4,682             14,263             0.09             0.27
Restructuring and other, net (1)               43,790             13,757              36,223             10,395             0.69             0.21
ERP implementation costs (1)                   27,109             13,617              20,120             10,091             0.38             0.19

Gains on sale of properties (1)                (3,733)           (18,614)             (3,449)           (13,843)           (0.06)           (0.26)
Tax adjustments (2)                                 -                  -              22,433              3,508             0.43                0.06

Comparable (non-GAAP)                      $  (77,123)$ 108,780$  (57,740)$  54,218$ (1.11)$  1.03


------------
(1)Refer to Note 16, "Other Items Impacting Comparability," in the Notes to
Condensed Consolidated Financial Statements for additional information.
(2)In the third quarter of 2020, we recorded a charge of $2 million related to a
state tax law change. In addition, in the nine months ended September 30, 2020,
we recorded charges of $7 million and $13 million to our tax provision for
income taxes due to expiring state net operating losses and a valuation
allowance on our U.K. deferred tax assets, respectively. In the nine months
ended September 30, 2019, we recorded a $5 million charge to our tax provision
for income taxes due to expiring state net operating losses offset by a $1
million benefit to our provision due to a tax law change.
                                       50

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

The following table provides a reconciliation of the provision for income taxes and effective tax rate to the comparable provision for income taxes and comparable tax rate:

                                          Three months ended September 30,         Nine months ended September 30,
                                               2020                2019                2020                2019
                                                                       (In

thousands)

Provision for (benefit from) income taxes $    9,680$     278$  (15,897)$  50,156
Tax adjustments                               (2,070)                  -             (22,433)             (3,508)
Income tax effects of non-GAAP
adjustments                                    6,319               4,805              18,947               7,914

Comparable provision for (benefit from)
income taxes (1)                          $   13,929$   5,083

$ (19,383)$ 54,562


Effective tax rate on continuing
operations (2)                                  17.7   %             0.3  %            (10.3)  %            62.7  %
Tax adjustments and income tax effects of
non-GAAP adjustments (1)                         0.2   %             6.7  %            (14.8)  %           (12.5) %
Comparable tax rate on continuing
operations (1)                                  17.9   %             7.0  %            (25.1)  %            50.2  %


------------
(1)The comparable provision for income taxes is computed using the same
methodology as the GAAP provision of income taxes. Income tax effects of
non-GAAP adjustments are calculated based on statutory tax rates of the
jurisdictions to which the non-GAAP adjustments related. Refer to the previous
table for further information on the tax adjustments.
(2)The effective tax rate on continuing operations and comparable tax rate on
continuing operations are based on our earnings from continuing operations
before income taxes (EBT) and comparable earnings from continuing operations
before income taxes, respectively, found on the previous page.


The following table provides a reconciliation of total revenue to operating
revenue:
                                                      Three months ended September 30,                 Nine months ended September 30,
                                                          2020                    2019                    2020                    2019
                                                                                       (In thousands)
Total revenue                                     $       2,150,575$ 2,223,932$       6,207,163$ 6,649,252
Fuel                                                       (142,934)            (206,072)                  (442,276)            (642,988)
Subcontracted transportation                               (212,504)            (213,127)                  (558,492)            (630,351)
ChoiceLease liability insurance revenue (1)                  (4,971)              (9,092)                   (21,738)             (25,653)
Operating revenue                                 $       1,790,166$ 1,795,641$       5,184,657$ 5,350,260


------------
(1)In the first quarter of 2020, we announced our plan to exit the extension of
our liability insurance coverage for ChoiceLease customers. The exit of this
program is estimated to be completed in the second quarter of 2021. We have
revised our definition of operating revenues to exclude the revenues associated
with this program for better comparability of our on-going operations.

                                       51

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
The following table provides a reconciliation of FMS total revenue to FMS
operating revenue:
                                                   Three months ended September 30,                 Nine months ended September 30,
                                                       2020                    2019                    2020                    2019
                                                                                    (In thousands)
FMS total revenue                              $       1,297,217$ 1,397,346$       3,835,631$ 4,139,855
Fuel (1)                                                (138,880)            (198,669)                  (429,468)            (618,906)
ChoiceLease liability insurance revenue (2)               (4,971)              (9,092)                   (21,738)             (25,653)
FMS operating revenue                          $       1,153,366            1,189,585          $       3,384,425$ 3,495,296

FMS EBT                                        $          16,152          $

(108,550) $ (202,157)$ 10,107 FMS EBT as a % of FMS total revenue

                    1.2%                   (7.8)%                  (5.3)%                   0.2%
FMS EBT as a % of FMS operating revenue                1.4%                   (9.1)%                  (6.0)%                   0.3%


------------

(1)Includes intercompany fuel sales from FMS to DTS and SCS.
(2)In the first quarter of 2020, we announced our plan to exit the extension of
our liability insurance coverage for ChoiceLease customers. The exit of this
program is estimated to be completed in the second quarter of 2021. We have
revised our definition of operating revenues to exclude the revenues associated
with this program for better comparability of our on-going operations.


The following table provides a reconciliation of SCS total revenue to SCS
operating revenue:
                                                  Three months ended September 30,            Nine months ended September 30,
                                                      2020                2019                   2020                    2019
                                                                                   (In thousands)
SCS total revenue                                 $  685,415          $

617,600 $ 1,833,180$ 1,902,582 Subcontracted transportation

                        (172,003)          (136,914)                  (409,939)            (400,424)
Fuel                                                 (21,124)           (26,975)                   (58,585)             (88,602)
SCS operating revenue                             $  492,288            453,711          $       1,364,656            1,413,556

SCS EBT                                           $   57,848          $ 

34,595 $ 125,789 $ 112,686 SCS EBT as a % of SCS total revenue

                   8.4%                5.6%                   6.9%                    5.9%
SCS EBT as a % of SCS operating revenue               11.8%               7.6%                   9.2%                    8.0%




The following table provides a reconciliation of DTS total revenue to DTS
operating revenue:
                                                  Three months ended September 30,           Nine months ended September 30,
                                                      2020                2019                  2020                   2019
                                                                                  (In thousands)
DTS total revenue                                 $  299,680          $

359,211 $ 928,512$ 1,071,076 Subcontracted transportation

                         (40,501)           (76,213)                (148,553)            (229,927)
Fuel                                                 (25,550)           (35,283)                 (81,714)            (109,750)
DTS operating revenue                             $  233,629$ 247,715$       698,245$   731,399

DTS EBT                                           $   24,728          $ 

18,490 $ 58,141$ 63,034 DTS EBT as a % of DTS total revenue

                   8.3%                5.1%                  6.3%                   5.9%
DTS EBT as a % of DTS operating revenue               10.6%               7.5%                  8.3%                   8.6%




                                       52

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)

FORWARD-LOOKING STATEMENTS


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

•our expectations of the impact of the COVID-19 pandemic on our financial
results and operations, including with regard to our revenue, earnings, cash
flows, sales, commercial rental demand and utilization, used vehicle sales
market conditions (including estimates regarding pricing, demand, inventory and
wholesale and retail mix), automotive volumes in SCS, mileage, residual values
and depreciation assumptions, credit loss reserves, lease sales; ChoiceLease
cash flows;
•the anticipated benefits of actions taken to mitigate the adverse impacts of
COVID-19;
•our estimates on the impact of residual value estimate changes on earnings;
•our estimates on minimum used vehicle pricing increases necessary to maintain
current residual estimates for tractors and trucks;
•our expectations in our FMS business segment regarding anticipated ChoiceLease
revenue;
•our expectations in our SCS business segment regarding anticipated customer
activity;
•our expectations of the residual values of revenue earning equipment;
•the expected pricing and demand for used vehicles;
•our expectations of operating cash flow and capital expenditures through the
end of 2020;
•the adequacy of our accounting estimates and reserves for depreciation and
residual value, goodwill impairment, and income taxes;
•the adequacy of our fair value estimates of employee incentive awards under our
share-based compensation plans, publicly traded debt and other debt;
•our ability to fund all of our operating, investing and financial needs for the
foreseeable future through internally generated funds and outside funding
sources;
•our expected level of use and availability of outside funding sources and our
ability to refinance the current portion of long-term debt;
•our beliefs regarding our credit ratings and the impact of a significant
downgrade on our ability to issue commercial paper and borrow amounts under our
global revolving credit facility;
•our expectations as to return on pension plan assets and estimated
contributions;
•our expectations regarding the scope and anticipated outcomes with respect to
certain claims, complaints and proceedings;
•our expectations about the need to repatriate foreign cash to the U.S.;
•our ability to access commercial paper and other available debt financing in
the capital markets;
•our expectations regarding restructuring charges;
•our expectation on the realizability of our deferred tax assets; and
•the expected timing for the exit of our ChoiceLease insurance liability
program.


                                       53

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
These statements, as well as other forward-looking statements contained in this
Quarterly Report, are based on our current plans and expectations and are
subject to risks, uncertainties and assumptions. We caution readers that certain
important factors could cause actual results and events to differ significantly
from those expressed in any forward-looking statements. These risk factors
include, but are not limited to, the following:
•Market Conditions:
•The severity and duration of the COVID-19 pandemic and the governmental
responses thereto.
•Changes in general economic and financial conditions in the U.S. and worldwide
leading to decreased demand for our products and services, lower profit margins,
increased levels of bad debt and reduced access to credit and financial markets.
•Decreases in freight demand which would impact both our transactional and
variable-based contractual business.
•Changes in our customers' operations, financial condition or business
environment that may limit their demand for, or ability to purchase, our
products and services.
•Decreases in market demand affecting the commercial rental market and used
vehicle sales as well as global economic conditions.
•Volatility in customer volumes and shifting customer demand in the industries
serviced by our SCS business.
•Changes in current financial, tax or regulatory requirements that could
negatively impact our financial results.
•Competition:
•Advances in technology may impact demand for our services or may require
increased investments to remain competitive, and our customers may not be
willing to accept higher prices to cover the cost of these investments.
•Competition from other service providers, some of which have greater capital
resources or lower capital costs, or from our customers, who may choose to
provide services themselves.
•Continued consolidation in the markets in which we operate which may create
large competitors with greater financial resources.
•Our inability to maintain current pricing levels due to economic conditions,
demand for services, customer acceptance or competition.
•Profitability:
•Our inability to obtain adequate profit margins for our services.
•Lower than expected sales volumes or customer retention levels.
•Decreases in commercial rental fleet utilization and pricing.
•Lower than expected used vehicle sales pricing levels and fluctuations in the
anticipated proportion of retail versus wholesale sales.
•Loss of key customers in our SCS and DTS business segments.
•Our inability to adapt our product offerings to meet changing consumer
preferences on a cost-effective basis.
•The inability of our legacy information technology systems to provide timely
access to data.
•Sudden changes in fuel prices and fuel shortages.
•Higher prices for vehicles, diesel engines and fuel as a result of new
environmental standards.
•Higher than expected maintenance costs and lower than expected benefits
associated with our maintenance initiatives.
•Our inability to successfully execute our asset management initiatives,
maintain our fleet at normalized levels and right-size our fleet in line with
demand.
•Our key assumptions and pricing structure of our SCS and DTS contracts prove to
be inaccurate.
•Increased unionizing, labor strikes and work stoppages.
•Difficulties in attracting and retaining drivers and technicians due to driver
and technician shortages, which may result in higher costs to procure drivers
and technicians and higher turnover rates affecting our customers.
•Our inability to manage our cost structure.
•Our inability to limit our exposure for customer claims.
                                       54

--------------------------------------------------------------------------------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS - (Continued)
•Unfavorable or unanticipated outcomes legal or regulatory proceedings or
uncertain positions.
•Business interruptions or expenditures due to severe weather or natural
occurrences.
•Financing Concerns:
•Higher borrowing costs.
•Unanticipated interest rate and currency exchange rate fluctuations.
•Negative funding status of our pension plans caused by lower than expected
returns on invested assets and unanticipated changes in interest rates.
•Withdrawal liability as a result of our participation in multi-employer plans.
•Instability in U.S. and worldwide credit markets, resulting in higher borrowing
costs and/or reduced access to credit.
•Accounting Matters:
•Reductions in residual values or useful lives of revenue earning equipment.
•Increases in compensation levels, retirement rate and mortality resulting in
higher pension expense; regulatory changes affecting pension estimates, accruals
and expenses.
•Changes in accounting rules, assumptions and accruals, including with regard to
assumptions for goodwill impairment testing.
•Difficulties and delays in implementing our Enterprise Resource Planning system
and related processes.
•Changes in the realization and timing of future sources of taxable income.
•Other risks detailed from time to time in our SEC filings including our 2019
Annual Report on Form 10-K and in "Item 1A.-Risk Factors" of this Quarterly
Report. To the extent to which the COVID-19 outbreak adversely affects our
business, results of operations and financial condition, it may also have the
effect of heightening many of the risks described in the section entitled Risk
Factors of our 2019 Annual Report on Form 10-K and any subsequent Quarterly
Reports on Form 10-Q.

New risk factors emerge from time to time and it is not possible for management
to predict all such risk factors or to assess the impact of such risk factors on
our business. As a result, no assurance can be given as to our future results or
achievements. You should not place undue reliance on the forward-looking
statements contained herein, which speak only as of the date of this Quarterly
Report. We do not intend, or assume any obligation, to update or revise any
forward-looking statements contained in this Quarterly Report, whether as a
result of new information, future events or otherwise.



                                       55

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