Interim Financial Statements

The accompanying unaudited Consolidated Condensed Financial Statements include the accounts of Ryder System, Inc. (Ryder) and all entities in which Ryder has a controlling voting interest (subsidiaries) and variable interest entities (VIEs) required to be consolidated in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with the accounting policies described in our 2014 Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial Statements and notes thereto. In the opinion of management, all adjustments (consisting of normal recurring accruals and items referenced under the "Revision of Prior Period Financial Statements") considered necessary for a fair statement have been included and the disclosures herein are adequate. The operating results for interim periods are unaudited and are not necessarily indicative of the results that can be expected for a full year.

During the first quarter of 2015, our management structure changed within the supply chain business. We created the role of President of Dedicated Transportation Solutions (DTS) for the dedicated product offering which was previously within Supply Chain Solutions (SCS). We are now reporting our financial performance as follows: (1) Fleet Management Solutions (FMS), which provides full service leasing, commercial rental, contract maintenance, and contract-related maintenance of trucks, tractors and trailers to customers principally in the U.S., Canada and the U.K.; (2) DTS, which provides vehicles and drivers as part of a dedicated transportation solution in the U.S.; and (3) SCS, which provides comprehensive supply chain solutions including distribution and transportation services in North America and Asia. Dedicated services provided as part of an integrated, multi-service, supply chain solution are reported in the SCS business segment. Prior period amounts have been recast to conform to the new presentation. This change impacted Note (F), "Goodwill," and Note (Q), "Segment Reporting," with no impact on consolidated revenues, net income or cash flows.

Revision of Prior Period Financial Statements

The Company periodically enters into sale and leaseback transactions to lower the total cost of funding our operations, to diversify funding among different classes of investors and among different types of funding instruments. Historically, these sale-leaseback transactions resulted in a reduction of revenue earning equipment and debt on the balance sheet, as proceeds from the sale of revenue earning equipment were primarily used to repay debt. The related leasebacks were historically treated as off-balance sheet operating leases and were included in our reported total obligations leverage ratios.

In April of 2015, we completed a financing transaction of revenue earning equipment with third parties not deemed to be variable interest entities. The revenue earning equipment subject to this transaction was originally owned and titled in a titling trust which is a wholly-owned, consolidated subsidiary of Ryder. As part of the sale-leaseback transaction, the titling trust created special units of beneficial interests (SUBIs) for the specific revenue earning equipment. The SUBIs were then sold to third parties and leased back to Ryder. In conjunction with this transaction, we reviewed and evaluated the structure to determine whether it qualified for off-balance sheet treatment. We concluded the April 2015 transaction should be treated as an issuance of financial interests that does not qualify for deconsolidation. As a result, off-balance sheet treatment is not appropriate for the current, as well as similar prior year transactions.

We have evaluated the materiality of this revision, quantitatively and qualitatively, and concluded it was not material to any of our previously issued consolidated financial statements and correction as an out of period adjustment in the quarter ended June 30, 2015 would not be material. However, we have elected to revise previously issued financial statements to avoid inconsistencies in our financial statements. Adjustments may not be additive and may have minor differences within the tables due to rounding.

The effects of this revision on our Consolidated Statements of Earnings were as follows (in millions):



	Year ended December 31, 2014					Year ended December 31, 2013					Year ended December 31, 2012
	As Previously Reported		Adjustment		As Revised	As Previously Reported		Adjustment		As Revised	As Previously Reported		Adjustment		As Revised
Cost of lease and rental	$	2,039.3	(2.4	)	2,036.9	$	1,928.9	(3.4	)	1,925.5	$	1,902.8	(2.4	)	1,900.4
Interest expense	142.1		2.6		144.7	137.2		3.3		140.5	140.6		2.7		143.3
Earnings from continuing operations before income taxes	338.5		(0.2	)	338.3	368.9		0.1		369.0	303.1		(0.3	)	302.8
Provision for income taxes	118.1		(0.1	)	118.0	125.7		—		125.7	102.2		(0.1	)	102.1
Earnings from continuing operations	220.5		(0.3	)	220.2	243.2		0.1		243.3	200.9		(0.2	)	200.7
Net earnings	218.6		(0.3	)	218.3	237.8		0.1		237.9	210.0		(0.3	)	209.7
Earnings (loss) per common share — Diluted, Net Earnings	4.14		—		4.14	4.63		—		4.63	3.91		(0.01	)	3.90



	Three months ended March 31, 2015					Three months ended March 31, 2014
	As Previously Reported		Adjustment		As Revised	As Previously Reported		Adjustment		As Revised
Cost of lease and rental	$	519.2	(0.8	)	518.4	$	493.0	(0.4	)	492.6
Interest expense	35.8		1.0		36.8	35.1		0.4		35.5
Earnings from continuing operations before income taxes	84.4		(0.2	)	84.2	75.0		—		75.0
Earnings from continuing operations	53.5		(0.2	)	53.3	49.1		—		49.1
Net earnings	52.9		(0.1	)	52.8	48.2		0.1		48.3



	Three months ended June 30, 2014					Six months ended June 30, 2014
	As Previously Reported		Adjustment		As Revised	As Previously Reported		Adjustment		As Revised
Cost of lease and rental	$	508.1	(0.5	)	507.6	$	1,001.1	(0.9	)	1,000.2
Interest expense	35.3		0.4		35.7	70.4		0.9		71.3
Earnings from continuing operations before income taxes	120.0		0.1		120.1	195.0		0.1		195.1



	Three months ended September 30, 2014					Nine months ended September 30, 2014
	As Previously Reported		Adjustment		As Revised	As Previously Reported		Adjustment		As Revised
Cost of lease and rental	$	522.9	(0.7	)	522.2	$	1,524.0	(1.6	)	1,522.4
Interest expense	35.9		0.8		36.7	106.3		1.6		107.9
Earnings from continuing operations before income taxes	129.7		(0.1	)	129.6	324.8		(0.1	)	324.7
Provision for income taxes	45.8		(0.1	)	45.7	116.0		—		116.0
Earnings from continuing operations	84.0		(0.1	)	83.9	208.8		(0.1	)	208.7
Net earnings	83.7		(0.1	)	83.6	207.3		—		207.3

The effects of this revision on our Consolidated Statements of Comprehensive Income were as follows (in millions):



	Comprehensive Income
	As Previously Reported		Adjustment		As Revised
Year ended December 31, 2014	$	36.6	(0.2	)	36.4
Year ended December 31, 2013	387.2		0.1		387.3
Year ended December 31, 2012	189.5		(0.2	)	189.3

Three months ended March 31, 2015	$	0.2	(0.1	)	0.1
Three months ended September 30, 2014	39.8		(0.1	)	39.7
Nine months ended September 30, 2014	179.1		—		179.1
Three months ended June 30, 2014	102.6		—		102.6
Six months ended June 30, 2014	139.3		0.1		139.4
Three months ended March 31, 2014	36.8		—		36.8

The effects of this revision on our Consolidated Balance Sheets were as follows (in millions):



	March 31, 2015					December 31, 2014					December 31, 2013
	As Previously Reported		Adjustment		As Revised	As Previously Reported		Adjustment		As Revised	As Previously Reported		Adjustment		As Revised
Revenue earning equipment, net	$	7,208.3	201.2		7,409.5	$	6,994.4	207.4		7,201.9	$	6,490.8	102.0		6,592.8
Total assets	9,906.8		201.2		10,108.0	9,676.0		207.4		9,883.4	9,103.8		102.0		9,205.8
Short-term debt and current portion of long-term debt	11.4		24.1		35.5	12.2		24.1		36.3	259.4		12.8		272.2
Accrued expenses and other current liabilities	489.6		(7.1	)	482.5	520.5		(6.8	)	513.7	496.3		(1.9	)	494.4
Total current liabilities	1,126.5		16.9		1,143.4	1,093.6		17.2		1,110.8	1,231.1		10.9		1,242.0
Long-term debt	4,692.5		188.1		4,880.6	4,500.3		194.0		4,694.3	3,930.0		93.0		4,023.0
Other non-current liabilities	788.1		(3.2	)	784.9	786.7		(3.4	)	783.3	616.3		(1.6	)	614.7
Deferred income taxes	1,488.1		(0.2	)	1,487.9	1,476.0		(0.2	)	1,475.8	1,429.6		—		1,429.6
Total liabilities	8,095.2		201.7		8,296.9	7,856.5		207.8		8,064.3	7,207.1		102.1		7,309.2
Retained earnings	1,479.2		(0.5	)	1,478.7	1,450.9		(0.4	)	1,450.5	1,390.8		(0.2	)	1,390.6
Total shareholders’ equity	1,811.5		(0.5	)	1,811.0	1,819.5		(0.4	)	1,819.1	1,896.7		(0.1	)	1,896.6
Total liabilities and shareholders’ equity	9,906.8		201.2		10,108.0	9,676.0		207.4		9,883.4	9,103.8		102.0		9,205.8

The effects of this revision on the individual line items within our Consolidated Statements of Cash Flows were as follows (in millions):



	Year ended December 31, 2014							Year ended December 31, 2013							Year ended December 31, 2012
	As Previously Reported			Adjustment		As Revised		As Previously Reported			Adjustment		As Revised		As Previously Reported			Adjustment		As Revised
Net earnings	$	218.6		(0.3	)	218.3		$	237.8		0.1		237.9		$	210.0		(0.3	)	209.7
Depreciation expense	1,040.3			17.6		1,057.8		957.1			26.5		983.6		939.7			22.4		962.1
Deferred income tax expense	104.8			—		104.7		113.6			—		113.6		87.1			(0.1	)	87.0
Accrued expenses and other non-current liabilities	(48.7		)	(4.4	)	(53.1	)	(66.6		)	2.2		(64.4	)	(68.3		)	4.1		(64.2	)
Net cash provided by operating activities from continuing operations	1,370.0			12.8		1,382.8		1,223.1			28.7		1,251.8		1,134.1			26.1		1,160.2
Debt proceeds	839.7			125.8		965.5		557.0			—		557.0		745.8			130.2		876.0
Debt repaid, including capital and financing lease obligations	(280.7		)	(12.8	)	(293.5	)	(332.6		)	(46.6	)	(379.2	)	(283.9		)	(26.1	)	(310.0	)
Net cash provided by financing activities from continuing operations	198.7			113.0		311.7		393.6			(46.5	)	347.1		333.8			104.1		437.9
Purchases of property and revenue earning equipment	(2,259.2		)	—		(2,259.2	)	(2,140.5		)	17.9		(2,122.6	)	(2,133.2		)	—		(2,133.2	)
Sale and leaseback of revenue earning equipment	125.8			(125.8	)	—		—			—		—		130.2			(130.2	)	—
Net cash used in investing activities from continuing operations	(1,578.7		)	(125.8	)	(1,704.5	)	(1,621.7		)	17.9		(1,603.8	)	(1,504.3		)	(130.2	)	(1,634.5	)



	Three months ended March 31, 2015							Three months ended March 31, 2014
	As Previously Reported			Adjustment		As Revised		As Previously Reported			Adjustment		As Revised
Net earnings	$	52.9		(0.1	)	52.8		$	48.2		0.1		48.3
Depreciation expense	262.4			6.2		268.6		248.8			3.1		251.9
Deferred income tax expense	26.7			(0.1	)	26.6		21.7			—		21.7
Accrued expenses and other non-current liabilities	(21.5		)	(0.1	)	(21.6	)	(29.9		)	(3.1	)	(33.0	)
Net cash provided by operating activities from continuing operations	277.9			6.0		283.8		237.7			—		237.7
Debt repaid, including capital and financing lease obligations	(457.6		)	(6.0	)	(463.5	)	(252.8		)	—		(252.8	)
Net cash provided by financing activities from continuing operations	184.8			(6.0	)	178.9		215.2			—		215.2



	Six months ended June 30, 2014							Nine months ended September 30, 2014
	As Previously Reported			Adjustment		As Revised		As Previously Reported			Adjustment		As Revised
Net earnings	$	123.6		—		123.6		$	207.3		—		207.3
Depreciation expense	506.0			6.1		512.1		770.1			11.3		781.4
Accrued expenses and other non-current liabilities	(67.6		)	0.2		(67.4	)	(41.5		)	(4.9	)	(46.4	)
Net cash provided by operating activities from continuing operations	536.5			6.4		542.9		974.7			6.3		981.0
Debt proceeds	765.7			—		765.7		769.9			125.8		895.7
Debt repaid, including capital and financing lease obligations	(271.2		)	(6.4	)	(277.6	)	(278.4		)	(6.4	)	(284.8	)
Net cash provided by financing activities from continuing operations	430.0			(6.4	)	423.6		213.1			119.4		332.5
Sale and leaseback of revenue earning equipment	—			—		—		125.8			(125.8	)	—
Net cash used in investing activities from continuing operations	(939.8		)	—		(939.8	)	(1,171.5		)	(125.8	)	(1,297.3	)