2. Safe Harbor
Certain statements and information included in this presentation are quot;forward-looking statementsquot; under the
Federal Private Securities Litigation Reform Act of 1995. Accordingly, these forward-looking statements should be
evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause
actual results and events to differ materially from those in the forward-looking statements. Important factors that
could cause such differences include, among others, our ability to obtain adequate profit margins for our services,
our inability to maintain current pricing levels due to soft economic conditions, customer acceptance or competition,
customer retention levels, unexpected volume declines, automotive plant shutdowns and shift eliminations, loss of
key customers in the Supply Chain Solutions (SCS) business segment, unexpected reserves or write-offs due to
the deterioration of the credit worthiness or bankruptcy of customers, the timing and impact of the restructuring
activities announced in Q4 2008, changes in financial, tax or regulatory requirements or changes in customers’
business environments that will limit their ability to commit to long-term vehicle leases, changes in economic and
market conditions affecting the commercial rental market or the sale of used vehicles, a decrease in credit ratings,
increased debt costs resulting from volatile financial markets, lack of accretive acquisition opportunities, inability to
achieve planned synergies and customer retention levels from acquisitions, labor strikes or work stoppages
affecting our or our customers’ business operations, adequacy of accounting estimates, reserves and accruals
particularly with respect to pension, taxes, insurance and revenue, changes in general economic conditions, further
decline in pension plan returns, sudden or unusual changes in fuel prices, availability of qualified drivers, our ability
to manage our cost structure, new accounting pronouncements, rules or interpretations, changes in government
regulations including regulations regarding vehicle emissions and the risks described in our filings with the
Securities and Exchange Commission. The risks included here are not exhaustive. New risks 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 risks on
our business. Accordingly, we undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise.
2
4. 4th Quarter Results Overview
► Earnings per diluted share were $0.19 versus $1.24 in 4Q07
– 4Q08 included a $0.90 charge related to restructuring and other items
– 4Q07 included a $0.06 benefit related primarily to Canada tax law changes
► Comparable earnings per share were $1.09 versus $1.18 in 4Q07
► Revenue declined 18% vs. prior year, reflecting a change from gross to net
revenue reporting for a supply chain subcontracted transportation customer,
lower fuel services revenue and unfavorable foreign exchange rate movements
► Operating revenue down 7% vs. prior year driven by unfavorable foreign
exchange rates of 5%, lower commercial rental revenue, lower automotive
volumes and lower fuel pass throughs, partially offset by contractual revenue
growth including acquisitions
4
5. 4th Quarter Results Overview
► Fleet Management Solutions (FMS) total revenue down 10% (and operating
revenue down 4%) vs. prior year
– Contractual revenue remained flat; up 4% excluding foreign exchange
– Full service lease revenue including acquisitions flat; up 4% excluding foreign exchange
– Contract maintenance revenue grew 2% organically; up 4% excluding foreign exchange
– Commercial rental revenue down 15%; down 11% excluding foreign exchange
– Fuel revenue down 25% due to both price and volume declines
► FMS net before tax earnings (NBT) down 15%
– FMS NBT down 12% excluding foreign exchange
– FMS NBT percent of operating revenue down 170 basis points to 11.7%
► FMS earnings negatively impacted by commercial rental results and foreign
exchange, partially offset by contractual business performance including
accretive acquisitions
5
6. 4th Quarter Results Overview
► Supply Chain Solutions (SCS) total revenue down 35% vs. prior year due largely to change
from gross to net revenue reporting for a supply chain subcontracted transportation
customer
► SCS operating revenue down 13% vs. prior year due to lower automotive volumes and an
unfavorable foreign exchange impact of 7%
► SCS net before tax earnings (NBT) down 21%
– SCS NBT percent of operating revenue down 50 basis points to 5.1%
► SCS earnings negatively impacted by lower international operating results and, to a lesser
extent, lower automotive revenue partially offset by lower compensation costs
► Dedicated Contract Carriage (DCC) total revenue down 13% (and operating revenue
down 12%) vs. prior year due to non-renewed contracts, lower volumes and lower passed
through fuel costs
► DCC net before tax earnings (NBT) up 4%
– DCC NBT percent of operating revenue up 160 basis points to 10.3%
► DCC earnings positively impacted by improved operating margins and efficiencies
6
7. Key Financial Statistics
($ Millions, Except Per Share Amounts)
Fourth Quarter
2008 2007 % B/(W)
(1)(2)
Operating Revenue $ 1,109.5 $ 1,189.6 (7%)
(3)
Fuel Services and Subcontracted Transportation Revenue 264.3 476.6 (45%)
(3)
Total Revenue $ 1,373.8 $ 1,666.2 (18%)
Earnings Per Share $ 0.19 $ 1.24 (85%)
(1)
Comparable Earnings Per Share $ 1.09 $ 1.18 (8%)
Memo:
Average Shares (Millions) - Diluted 55.5 58.1
Tax Rate (4) 67.9% 35.6%
(1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation.
(2) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel services
revenue net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation as fuel is largely
a pass through to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is
excluded from the operating revenue computation as it is typically a pass through to customers and the Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance.
(3) Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis.
(4) Tax rate includes the impact of non-deductible restructuring charges partially offset by reversal of tax reserves. Comparable tax rate would be 37.9% in 2008 vs. 38.7% in 2007,
excluding these items. See page 44 for reconciliation.
7
8. Key Financial Statistics
($ Millions, Except Per Share Amounts)
Full Year
2008 2007 % B/(W)
(1)(2)
Operating Revenue $ 4,704.5 $ 4,636.6 1%
(3)
Fuel Services and Subcontracted Transportation Revenue 1,499.2 1,929.4 (22%)
(3)
Total Revenue $ 6,203.7 $ 6,566.0 (6%)
Earnings Per Share $ 3.52 $ 4.24 (17%)
(1)
Comparable Earnings Per Share $ 4.49 $ 4.21 7%
Memo:
Average Shares (Millions) - Diluted 56.8 59.8
Tax Rate (4) 42.9% 37.4%
(1)
Adjusted Return on Capital (Trailing 12 Month) 7.3% 7.4%
(1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation.
(2) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel services
revenue net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation as fuel is largely
a pass through to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is
excluded from the operating revenue computation as it is typically a pass through to customers and the Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance.
(3) Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis.
(4) Tax rate includes the impact of non-deductible restructuring charges, tax law changes and the reversal of tax reserves in 2008, and tax law changes in 2007. Comparable tax
rate would be 39.4% in 2008 vs. 38.1% in 2007. See page 44 for reconciliation. 8
9. Business Segment
($ Millions)
Fourth Quarter
Mem o: Total Revenue
2008 2007 % B/(W) 2008 2007 % B/(W)
(1)
Operating Revenue :
Fleet Managem ent Solutions $ 736.7 $ 764.8 (4)% $ 976.3 $ 1,085.4 (10)%
(2)
Supply Chain Solutions 294.8 337.2 (13)% 357.2 545.8 (35)%
Dedicated Contract Carriage 123.6 140.3 (12)% 126.2 144.3 (13)%
Elim inations (45.6) (52.7) 13% (85.9) (109.3) 21%
Total (2) $ 1,109.5 $ 1,189.6 (7)% $ 1,373.8 $ 1,666.2 (18)%
Segm ent Net Before Tax Earnings:
Fleet Managem ent Solutions $ 86.6 $ 102.3 (15)%
Supply Chain Solutions 15.0 18.9 (21)%
Dedicated Contract Carriage 12.7 12.3 4%
Elim inations (8.4) (8.1) (5)%
105.9 125.4 (16)%
Central Support Services (Unallocated Share) (8.7) (14.0) 38%
(1)
Earnings Before Restructuring and Incom e Taxes 97.2 111.4 (13)%
(3)
Restructuring and Other Charges, Net and Other Item s (64.0) 0.4 NM
Earnings Before Incom e Taxes 33.2 111.8 (70)%
Provision for Incom e Taxes (22.6) (39.9) 43%
Net Earnings $ 10.6 $ 71.9 (85)%
(1)
Com parable Net Earnings $ 60.3 $ 68.3 (12)%
(1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation
(2) Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis.
(3) Our primary measure of segment financial performance excludes restructuring and other charges, net and other items. The applicable portion of the restructuring and
other charges, net that related to each segment was as follows: FMS – ($16.7), SCS – ($45.3), DCC – ($0.5) and CSS – ($1.5) in 2008; FMS – $0.3 and SCS –$0.1 in
2007.
9
10. Business Segment
($ Millions)
Full Year
Mem o: Total Revenue
2008 2007 % B/(W) 2008 2007 % B/(W)
(1)
Operating Revenue :
Fleet Managem ent Solutions $ 3,034.7 $ 2,979.4 2% $ 4,450.0 $ 4,162.6 7%
(2)
Supply Chain Solutions 1,330.7 1,314.5 1% 1,643.1 2,250.3 (27)%
Dedicated Contract Carriage 536.8 552.9 (3)% 547.8 567.6 (4)%
Elim inations (197.7) (210.2) 6% (437.2) (414.5) (5)%
Total (2) $ 4,704.5 $ 4,636.6 1% $ 6,203.7 $ 6,566.0 (6)%
Segm ent Net Before Tax Earnings:
Fleet Managem ent Solutions $ 398.5 $ 373.7 7%
Supply Chain Solutions 42.7 63.2 (32)%
Dedicated Contract Carriage 49.6 47.4 5%
Elim inations (31.8) (31.2) (2)%
459.0 453.1 1%
Central Support Services (Unallocated Share) (38.7) (44.4) 13%
(1)
Earnings Before Restructuring and Incom e Taxes 420.3 408.7 3%
(3)
Restructuring and Other Charges, Net and Other Item s (70.4) (3.2) NM
Earnings Before Incom e Taxes 349.9 405.5 (14)%
Provision for Incom e Taxes (150.0) (151.6) 1%
Net Earnings $ 199.9 $ 253.9 (21)%
(1)
Com parable Net Earnings $ 254.8 $ 251.9 1%
(1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation.
(2) Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis.
(3) Our primary measure of segment financial performance excludes restructuring and other charges, net and other items. The applicable portion of the restructuring and
other charges, net that related to each segment was as follows: FMS – ($16.7), SCS – ($51.7), DCC – ($0.5) and CSS – ($1.5) in 2008; FMS – $4.5, SCS – ($5.6), DCC
–($1.1) and CSS –($1.0) in 2007.
10
11. Capital Expenditures
($ Millions)
Full Year
2008 $
2008 2007 O/(U) 2007
Full Service Lease $ 986 $ 900 $ 86
Commercial Rental 171 219 (48)
Operating Property and Equipment 112 76 36
Gross Capital Expenditures 1,269 1,195 74
Less: Proceeds from Sales (Primarily Revenue Earning Equipment) 265 374 (109)
Less: Proceeds from Sale and Leaseback of Revenue Earning Equipment - 150 (150)
Net Capital Expenditures $ 1,004 $ 671 $ 333
Memo: Acquisitions $ 247 $ 75 $ 172
11
12. Cash Flow
($ Millions)
Full Year
2008 2007
Net Earnings $ 200 $ 254
Depreciation 843 816
Gains on Vehicle Sales, Net (39) (44)
Amortization and Other Non-Cash Charges, Net 63 32
Changes in Working Capital and Deferred Taxes 189 45
Cash Provided by Operating Activities 1,256 1,103
Proceeds from Sales (Primarily Revenue Earning Equipment) 265 374
Sale and Leaseback of Revenue Earning Equipment - 150
Collections of Direct Finance Leases 62 63
Other, Net - 2
(1)
Total Cash Generated 1,583 1,692
(2)
Capital Expenditures (1,234) (1,317)
(1)(3)
Free Cash Flow $ 349 $ 375
(1) Non-GAAP financial measure; refer to Appendix – Non-GAAP Financial Measures
(2) Capitalexpenditures presented net of changes in accounts payable related to purchases of revenue earning equipment
(3) Free Cash Flow excludes acquisitions and changes in restricted cash
12
13. Debt to Equity Ratio
($ Millions)
300% 275% 275%
234% Total
250% 225%
201% Obligations
200%
146% 129% 151%
168% 157% to Equity (1)
150%
100%
50% Balance
0% Sheet Debt
to Equity
12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 Long
Term
Target
(2)
Midpoint
12/31/08 12/31/07
Balance Sheet Debt $ 2,863 $ 2,776
Percent To Equity 213% 147%
(1)
Total Obligations $ 3,026 $ 2,954
(1)
Percent To Equity 225% 157%
Total Equity $ 1,345 $ 1,888
Note: Includes impact of accumulated net pension related equity charge of $480 million as of 12/31/08 and $148 million as of 12/31/07.
(1) Non-GAAP financial measure. Total obligations include the present value of minimum lease payments and guaranteed residual values under operating leases of
$163 million as of 12/31/08 and $178 million at 12/31/07.
(2) Represents long term total obligations to equity target of 250 - 300% while maintaining a strong investment grade rating.
13
15. (1)
Asset Management Update
► Units held for sale were 6,300 at quarter end; down 2% from 6,400 units held for sale in
the prior year
– Units held for sale were up 35% from 4,600 at the end of prior quarter
► The number of used vehicles sold in the fourth quarter was 3,200, down 42% compared
with prior year
► Proceeds per unit were up 5% for tractors and flat for trucks in the fourth quarter
compared with prior year
► Vehicles no longer earning revenue were 7,600 at quarter end; up 200 from the prior
year(2)
– Vehicles no longer earning revenue were up 2,000 vs. the end of the prior quarter predominantly
due to an increase in units held for sale
► Average fourth quarter total commercial rental fleet was down 5% year-over-year
(1) All information presented on this page only is for the U.S. fleet and excludes Canadian and U.K. operations (units rounded to nearest hundred).
(2) Vehicles no longer earning revenue definition revised in 1Q08 to include all units held for sale and all units that have not earned revenue in 30 days.
15
17. 2009 Overall Environment
Baseline Assumptions Opportunities (+) / Risks (-)
● No 2009 economic recovery − Deeper economic decline
anticipated
● Continuing very weak economy
- additional contraction
- unfavorable comparisons vs. prior year
● Interest rates remain at current + Long term rates decline as credit
level crisis eases
− Further rate volatility
● Assumes current unfavorable − U.S. dollar strengthening
FX rates (primarily impacts revenue)
● Positive free cash flow + Pension and tax law revisions
− Additional pension contribution
● No share repurchase + Resume share repurchase
program
17
18. FMS Assumptions
Baseline Assumptions Opportunities (+) / Risks (-)
● Slowing contractual net sales − Further fleet downsizing
+ Additional acquisitions
● Lower rental demand with − Further price and demand
additional pricing decline weakening
● Stable volume of used vehicle − Additional decline in used
sales with lower pricing vehicle pricing and/or volume
● Inventory levels modestly up
● Maintenance and overhead cost + Additional cost initiatives
reduction initiatives
18
19. SCS / DCC Assumptions
Baseline Assumptions Opportunities (+) / Risks (-)
● Lower volumes with existing − Potential for further volume
customers, especially in declines and automotive plant
automotive shutdowns
● Focus on customer retention and − Potential for customer contraction
business development and lost business
+ Weak economy drives increased
outsourcing
● Exit underperforming ● No significant risks or
international markets and opportunities
contracts
● Increase penetration of non- + Acquisitions
automotive segments
● Increased impact from customer − Negative impacts of potential large
bankruptcies customer bankruptcies
19
20. Key Financial Statistics
($ Millions, Except Per Share Amounts)
2009
Forecast 2008 % B / (W)
Revenue:
Operating (1) (2) $ 4,210 - 4,470 $ 4,705 (5 - 11)%
Fuel Services and Subcontracted Transportation 1,020 - 1,090 1,499 (27 - 32)%
Total Revenue $ 5,230 - 5,560 $ 6,204 (10 - 16)%
Earnings:
Earnings Before Income Taxes $ 246 - 312 $ 350 (11 - 30)%
Earnings $ 145 - 184 $ 200 (8 - 28)%
Comparable Earnings Before Income Taxes $ 253 - 319 $ 420 (24 - 40)%
Comparable Earnings (1) $ 151 - 190 $ 255 (25 - 41)%
Earnings Per Share (EPS):
EPS $ 2.60 - 3.30 $ 3.52 (6 - 26)%
(1)
Comparable EPS $ 2.70 - 3.40 $ 4.49 (24 - 40)%
(3)
Memo: Average Shares (Millions) - Diluted 55.9 56.8
Tax Rate 41.0% 42.9%
Adjusted Return on Capital (1) 5.8 - 6.8% 7.3%
(1) Non-GAAP financial measure; refer to Appendix – Non-GAAP Financial Measures. See page 43 for 2008 reconciliation. 2009 comparable earnings, comparable earnings
before income taxes, and EPS excludes $5.5 million, $7 million, and $0.10 restructuring charges related to 2008 initiatives.
(2) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel
services revenue net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation
as fuel is largely a pass through to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted
transportation revenue is excluded from the operating revenue computation as prior to 2008 it was largely a pass through to customers and the Company realized minimal
changes in profitability as a result of fluctuations in subcontracted transportation.
(3) 2008 tax rate includes the impact of non-deductible restructuring charges, tax law changes and the reversal of tax reserves.
Note: Earnings per share amounts are calculated independently for each component and may not be additive due to rounding.
20
21. Business Segment Revenue
2009 Forecast Midpoint Change % vs. 2008
As Reported w/o FX
Fleet Management Solutions:
Gross Revenue (1) (11)% (10)%
(2)
Contractual Revenue 1% 4%
Commercial Rental Revenue (15)% (12)%
Operating Revenue (2)% 1%
As Reported w/o FX & Fuel
Supply Chain Solutions:
Gross Revenue (3) (22)% (15)%
Operating Revenue (20)% (13)%
Dedicated Contract Carriage:
Gross Revenue (3) (8)% (2)%
Operating Revenue (10)% (4)%
(1)
Includes fuel revenue.
(2)
Includes full service lease and contract maintenance.
(3)
Includes subcontracted transportation revenue.
21
22. 2009 Causes of EPS Change
($ Earnings Per Share)
$4.49 (1)
0.13 - 0.53 $3.55 - $4.25
0.40 0.08
(0.50 – 0.60)
$2.70 - $3.40
(0.69)
(0.50 – 0.60) (0.11) (0.05)
(0.25 – 0.35)
2008 Commercial Used Vehicle Automotive 2009 Headcount Share Revenue & 2009 2009 Pension 2009 FX Impact 2009 Tax Impact 2009
Comparable Rental Sales Reductions Repurchases & Operational Comparable Expense Comparable
EPS Acquisitions to Improvements EPS Forecast Increase EPS Forecast
Date before Pension,
FX & Tax
(1) 2008 Comparable EPS is a non-GAAP financial measure; refer to Appendix – Non-GAAP Financial Measures. See page 43 for reconciliation. 2009 Comparable EPS excludes
$0.10 restructuring charges related to 2008 initiatives.
22
23. Pension Expense
($ Millions)
Drivers of the Change in 2009 Consolidated Pension Expense
2008 Pension Expense $ 3
Lower than Assumed Return on Assets in 2008 71
Change in Discount Rate (15)
Change in Expected Return Assumption 5
Benefit of Pension Contributions (4)
2008 Canadian Curtailment Benefit 4
Other 3
2009 Estimated Pension Expense Excluding FX Benefit 67
FX Benefit (2)
2009 Estimated Pension Expense $ 65
23
24. Business Segment Earnings
Segment NBT as % of Operating Revenue (1) Full Year
Segment NBT as % of Total Revenue
15
12.4 12.6 12.5 13.1
Fleet 13 11.2
Management 11 9.7
8.2
Solutions 9
7.3 7.5
7 9.0 9.0 9.0 9.0
8.7
5.9 6.7 6.0 7.3
5
2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast
Midpoint
5.3
4.2 3.9 4.8
5 4.0 3.2 3.2
Supply Chain 3
2.9 3.1 2.8 2.6
Solutions 1 (0.8) (0.6) 2.7 2.4 2.7
-1
(0.6) (0.4)
2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast
Midpoint
9.2 9.6
9
8.6
Dedicated 7.8 9.1
9.3
Contract 6.9 6.7 8.4
Carriage 7 6.3 6.1
5.9 7.5
6.8 6.5
5 6.2 6.0 5.8
2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast
Midpoint
(1) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel services revenue
net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation as fuel is largely a pass through
to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is excluded from the
operating revenue computation as prior to 2008 it was largely a pass through to customers and the Company realized minimal changes in profitability as a result of fluctuations in
subcontracted transportation. 24
25. Capital Expenditures
Full Service Lease:
► Capital for lease vehicles is committed after contracts are signed
with customers
► 2009 lease capital expenditures include:
● Replacement spending of $780 - $855 million
● Growth spending of $20 million
Growth capital represents an investment which results in $8 million
of annual revenue
Commercial Rental:
► No 2009 rental capital expenditures
25
26. Capital Expenditures, Cash Flow & Leverage
($ Millions)
Full Year
2009
Forecast 2008
Full Service Lease - Replacement $ 780 - 855
Full Service Lease - Growth 20
Full Service Lease 800 - 875 $ 986
Commercial Rental - 171
Operating Property and Equipment 100 112
Gross Capital Expenditures 900 - 975 1,269
Less: Proceeds from Sales 255 265
Net Capital Expenditures 645 - 720 $ 1,004
Cash Provided by Operating Activities $ 925 - 1,035 $ 1,256
Total Cash Generated (1) $ 1,245 - 1,355 $ 1,583
(1)(2)
Free Cash Flow $ 325 - 400 $ 349
(1)
Total Obligations to Equity 178 - 188% 225%
(1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures.
(2) Free Cash Flow excludes acquisitions. Acquisitions totaled $247 million in full year 2008 and $81 million in 2009 year-to-date.
26
27. EPS Forecast
($ Earnings Per Share)
First Quarter Full Year
(1)
2009 Comparable EPS Forecast $ 0.40 - 0.50 $ 2.70 - 3.40
(1)
2008 Comparable EPS $ 0.96 $ 4.49
(1) Non-GAAP financial measure. Refer to page 43 for 2008 reconciliation. First quarter and full year 2009 comparable
EPS excludes $0.03 and $0.10 restructuring charges related to 2008 initiatives.
27
28. Summary
Manage through cyclical impacts of prolonged recession and
market downturn, while driving growth from customer
outsourcing in contractual product lines
► Manage through adverse impacts of pension plan performance and cyclical
impacts in commercial rental and used vehicle sales
► Utilize cost management and restructuring opportunities
► Focus on strong customer retention, new business development and
sales/marketing initiatives
► Continue growth (excluding FX) in full service lease and contract maintenance
organically and through acquisitions
► Partially offset impact of lower automotive volumes on supply chain solutions
through industry diversification
► Renew focus on dedicated contract carriage growth opportunities
► Appropriately manage capital spending and fleet size resulting in strong free
cash flow
28
30. Appendix
Business Segment Detail
Central Support Services
Balance Sheet
Asset Management
Financial Indicators Forecast
Non-GAAP Financial Measures & Reconciliations
30
31. Fleet Management Solutions (FMS)
($ Millions)
Fourth Quarter
2008 2007 % B/(W)
Full Service Lease $ 505.4 $ 503.9 0%
Contract Maintenance 42.2 41.6 2%
Contractual Revenue 547.6 545.5 0%
Contract-related Maintenance 43.7 48.5 (10)%
Commercial Rental 128.7 152.0 (15)%
Other 16.7 18.8 (11)%
(a)
Operating Revenue 736.7 764.8 (4)%
Fuel Services Revenue 239.6 320.6 (25)%
Total Revenue $ 976.3 $ 1,085.4 (10)%
Segment Net Before Tax Earnings (NBT) $ 86.6 $ 102.3 (15)%
Segment NBT as % of Total Revenue 8.9% 9.4%
(a)
Segment NBT as % of Operating Revenue 11.7% 13.4%
(a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the FMS business segment and as
a measure of sales activity. Fuel services revenue, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating
revenue computation as fuel is largely a pass-through to customers for which the Company realizes minimal changes in profitability during periods of
steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period
of time as customer pricing for fuel services is established based on market fuel costs.
31
32. Fleet Management Solutions (FMS)
($ Millions)
Full Year
2008 2007 % B/(W)
Full Service Lease $ 2,042.1 $ 1,965.3 4%
Contract Maintenance 168.1 159.6 5%
Contractual Revenue 2,210.2 2,124.9 4%
Contract-related Maintenance 193.9 198.8 (2)%
Commercial Rental 557.5 583.3 (4)%
Other 73.1 72.4 1%
(a)
Operating Revenue 3,034.7 2,979.4 2%
Fuel Services Revenue 1,415.3 1,183.2 20%
Total Revenue $ 4,450.0 $ 4,162.6 7%
Segment Net Before Tax Earnings (NBT) $ 398.5 $ 373.7 7%
Segment NBT as % of Total Revenue 9.0% 9.0%
(a)
Segment NBT as % of Operating Revenue 13.1% 12.5%
(a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the FMS business segment and as
a measure of sales activity. Fuel services revenue, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating
revenue computation as fuel is largely a pass-through to customers for which the Company realizes minimal changes in profitability during periods of
steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period
of time as customer pricing for fuel services is established based on market fuel costs.
32
33. Supply Chain Solutions (SCS)
($ Millions)
Fourth Quarter
2008 2007 % B/(W)
U.S. Operating Revenue
Automotive & Industrial $ 117.4 $ 141.3 (17)%
High Tech & Consumer Industries 78.2 69.4 13%
Transportation Management 9.8 8.2 18%
(a)
U.S. Operating Revenue 205.4 218.9 (6)%
(a)
International Operating Revenue 89.4 118.3 (24)%
(a)
Operating Revenue 294.8 337.2 (13)%
Subcontracted Transportation 62.4 208.6 (70)%
Total Revenue $ 357.2 $ 545.8 (35)%
Segment Net Before Tax Earnings (NBT) $ 15.0 $ 18.9 (21)%
Segment NBT as % of Total Revenue 4.2% 3.5%
(a)
Segment NBT as % of Operating Revenue 5.1% 5.6%
Memo: Fuel Costs $ 22.7 $ 35.6 36%
(a)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the SCS business segment
and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as
subcontracted transportation is typically a pass-through to customers, the Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance.
33
34. Supply Chain Solutions (SCS)
($ Millions)
Full Year
2008 2007 % B/(W)
U.S. Operating Revenue
Automotive & Industrial $ 547.8 $ 551.7 (1)%
High Tech & Consumer Industries 310.5 288.9 7%
Transportation Management 38.5 32.6 18%
(a)
U.S. Operating Revenue 896.8 873.2 3%
(a)
International Operating Revenue 433.9 441.3 (2)%
(a)
Operating Revenue 1,330.7 1,314.5 1%
Subcontracted Transportation 312.4 935.8 (67)%
Total Revenue $ 1,643.1 $ 2,250.3 (27)%
Segment Net Before Tax Earnings (NBT) $ 42.7 $ 63.2 (32)%
Segment NBT as % of Total Revenue 2.6% 2.8%
(a)
Segment NBT as % of Operating Revenue 3.2% 4.8%
Memo: Fuel Costs $ 147.4 $ 124.5 (18)%
(a)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the SCS business segment
and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as
subcontracted transportation is typically a pass-through to customers, the Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance.
34
35. Dedicated Contract Carriage (DCC)
($ Millions)
Fourth Quarter
2008 2007 % B/(W)
(a)
Operating Revenue $ 123.6 $ 140.3 (12)%
Subcontracted Transportation 2.6 4.0 (35)%
Total Revenue $ 126.2 $ 144.3 (13)%
Segment Net Before Tax Earnings (NBT) $ 12.7 $ 12.3 4%
Segment NBT as % of Total Revenue 10.1% 8.5%
(a)
Segment NBT as % of Operating Revenue 10.3% 8.7%
Memo: Fuel Costs $ 22.4 $ 29.3 24%
(a)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the DCC business segment
and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as
subcontracted transportation is typically a pass-through to customers, the Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance.
35
36. Dedicated Contract Carriage (DCC)
($ Millions)
Full Year
2008 2007 % B/(W)
(a)
Operating Revenue $ 536.8 $ 552.9 (3)%
Subcontracted Transportation 11.0 14.7 (25)%
Total Revenue $ 547.8 $ 567.6 (4)%
Segment Net Before Tax Earnings (NBT) $ 49.6 $ 47.4 5%
Segment NBT as % of Total Revenue 9.1% 8.4%
(a)
Segment NBT as % of Operating Revenue 9.2% 8.6%
Memo: Fuel Costs $ 123.0 $ 107.1 (15)%
(a)
The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the DCC business segment
and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as
subcontracted transportation is typically a pass-through to customers, the Company realizes minimal changes in profitability as a result of
fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance.
36
38. Central Support Services (CSS)
($ Millions)
Full Year
2008 2007 % B/(W)
Allocated CSS Costs $ 146.8 $ 146.1 0%
Unallocated CSS Costs 38.7 44.4 13%
Total CSS Costs $ 185.5 $ 190.5 3%
38
39. Balance Sheet
($ Millions)
December 31, December 31,
2008 2007
Cash and Cash Equivalents $ 120 $ 116
Other Current Assets 831 1,106
Revenue Earning Equipment, Net 4,565 4,501
Operating Property and Equipment, Net 547 519
Other Assets 627 613
Total Assets $ 6,690 $ 6,855
Short-Term Debt / Current Portion Long-Term Debt $ 384 $ 223
Other Current Liabilities 727 797
Long-Term Debt 2,479 2,553
Other Non-Current Liabilities 1,755 1,394
Shareholders' Equity 1,345 1,888
Total Liabilities and Shareholders' Equity $ 6,690 $ 6,855
39
40. Asset Management Update (a)
Number FY03 FY04 FY05 FY06 FY07 FY08
of Units
6,000
5,180
5,008
4,750 4,938
5,000 4,843
4,596
4,539 4,571
4,360
4,167 4,261
4,104 4,195
3,996
3,868 3,839
4,000
3,572
3,042
3,000
2,000 1,890 1,938
1,584 1,646 1,561
967
1,000
0
(b)
Redeployments Extensions Early Terminations Early Replacements
(a) U.S. only
(b) Excludes early terminations where customer purchases vehicle
40
41. Financial Indicators Forecast (1)
($ Millions)
Total Cash Generated (2) Gross Capital Expenditures
Revenue Earning Equipment $1,760
$1,692
$1,583 PP&E/Other $1,411
$1,381 $1,289
$1,300 $1,195 $1,269
$1,183 $1,255 $1,165
$940
$1,054 $1,091
$949 $725
$835 $657 $600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Forecast
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Midpoint
Forecast Memo: Free Cash Flow (2)
Midpoint (3)
(242) 131 367 357 289 (216) (440) 375 349 365
Total Obligations to Equity Ratio (2)
275% Equity
234% Total Obligations (2)
Significant and predictable cash generation
225%
201%
168% 183%
146% 151% 157% Invest in growth (organic, acquisitions)
129%
Increase financial leverage towards long
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
term target of 250-300% Total Obligations
Forecast
Midpoint
to Equity
(1) Obligations to Equity include acquisitions. Free Cash Flow and Gross Capital Expenditures exclude acquisitions.
(2) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures.
(3) Includes $176 million payment to the IRS related to full resolution of 1998 - 2000 tax period matters.
41
42. Non-GAAP Financial Measures
► This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC
rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP
measure and an explanation why management believes that presentation of the non-GAAP financial
measure provides useful information to investors. Non-GAAP financial measures should be considered in
addition to, but not as a substitute for or superior to, other measures of financial performance prepared in
accordance with GAAP.
► Specifically, the following non-GAAP financial measures are included in this presentation:
Reconciliation & Additional Information
Non-GAAP Financial Measure Comparable GAAP Measure Presented on Slide Titled Page
Operating Revenue Total Revenue Key Financial Statistics 7-8
Operating Revenue Forecast Total Revenue Forecast Key Financial Statistics 20
Earnings Before Restructuring and Income Taxes Net Earnings Business Segment 9 - 10
Comparable / Earnings EPS Forecast EPS Forecast EPS Forecast 27
Comparable Net Earnings / EPS Net Earnings / EPS EPS and Net Earnings Reconciliation 43
Comparable NBT / Tax Rate NBT / Tax Rate Tax Rate Reconciliation 44
Adjusted Return on Capital / Forecast Net Earnings / Forecast Adjusted Return on Capital Reconciliation 45
Total Cash Generated / Free Cash Flow / Forecast Cash Provided by Operating Activities / Forecast Cash Flow Reconciliation 46 - 47
Total Obligations / Total Obligations to Equity Balance Sheet Debt / Debt to Equity Debt to Equity Ratio 13
Debt to Equity Reconciliation 48 - 49
FMS / SCS / DCC Operating Revenue and Segment FMS / SCS / DCC Total Revenue and Segment Fleet Management Solutions / Supply Chain 31 - 36
NBT as % of Operating Revenue NBT as % of Total Revenue Solutions / Dedicated Contract Carriage
42
43. EPS and Net Earnings Reconciliation
($ Millions or $ Earnings Per Share)
4Q08 - 4Q08 - FY08 - FY08 -
Net Earnings EPS Net Earnings EPS
Net Earnings / EPS $ 10.6 $ 0.19 $ 199.9 $ 3.52
Tax Law Changes - - (1.6) (0.03)
Reversal of Tax Reserve (7.9) (0.14) (7.9) (0.14)
Brazil Charges - - 6.8 0.12
4Q08 Restructuring Charges 53.2 0.96 53.2 0.94
International Asset Impairments/Write Offs 4.4 0.08 4.4 0.08
Comparable Net Earnings / EPS $ 60.3 $ 1.09 $ 254.8 $ 4.49
4Q07 - 4Q07 - FY07 - FY07 -
Net Earnings EPS Net Earnings EPS
Net Earnings $ 71.9 $ 1.24 $ 253.9 $ 4.24
3Q07 and 4Q07 Restructuring
(Recoveries)/ Charges (0.3) - 7.5 0.13
Gain on Sale of Property - - (6.2) (0.10)
Tax Law Changes (3.3) (0.06) (3.3) (0.06)
Comparable Net Earnings $ 68.3 $ 1.18 $ 251.9 $ 4.21
Note: Amounts may not recalculate due to rounding.
43
44. Tax Rate Reconciliation
4Q08 - 4Q08 - 4Q08 - FY08 FY08 FY08
NBT Tax Tax Rate NBT Tax Tax Rate
Reported $ 33.2 $ 22.6 67.9% $ 349.9 150.0 42.9%
Tax Law Changes - - - 1.6
Reversal of Tax Reserve - 7.9 - 7.9
Brazil Charges - - 6.5 (0.3)
4Q08 Restructuring Charges 58.4 5.3 58.4 5.3
International Asset Impairments/Write Offs 5.5 1.1 5.5 1.1
Comparable NBT / Tax Rate $ 97.2 $ 36.9 37.9% $ 420.3 165.6 39.4%
4Q07 - 4Q07 - 4Q07 - FY07 - FY07 - FY07 -
NBT Tax Tax Rate NBT Tax Tax Rate
Reported $ 111.8 $ 39.9 35.6% $ 405.5 151.6 37.4%
3Q07 and 4Q07 Restructuring Charges (0.3) (0.1) 11.6 4.0
Gain on Sale of Property (0.1) - (10.1) (3.9)
Tax Law Changes - 3.3 - 3.3
Comparable NBT / Tax Rate $ 111.4 43.1 38.7% $ 407.0 155.0 38.1%
Note: NBT represents net before tax earnings
Amounts are calculated independently for each component and may not be additive due to rounding.
44
45. Adjusted Return on Capital Reconciliation
($ Millions)
Forecast
Midpoint
12/31/09 12/31/08 12/31/07
(1)
Net Earnings $ 165 $ 200 $ 254
Restructuring and Other Charges, Net and Other Items 7 70 1
Income Taxes 115 150 152
Adjusted Earnings Before Income Taxes 287 420 407
(2)
Adjusted Interest Expense 170 165 169
(3)
Adjusted Income Taxes (184) (230) (220)
Adjusted Net Earnings $ 273 $ 355 $ 356
Average Total Debt $ 2,766 $ 2,882 $ 2,848
Average Off-Balance Sheet Debt 141 171 150
(4)
Average Adjusted Total Shareholders' Equity 1,412 1,788 1,792
Adjusted Average Total Capital $ 4,319 $ 4,841 $ 4,790
(5)
Adjusted Return on Capital 6.3% 7.3% 7.4%
(1) Earnings calculated based on a 12-month rolling period excluding comparable earnings items during the period.
(2) Interest expense includes implied interest on off-balance sheet vehicle obligations.
(3) Income taxes were calculated using the effective income tax rate for the period exclusive of comparable earnings items.
(4) Represents shareholders’ equity excluding comparable earnings items for those periods.
(5) The Company adopted adjusted return on capital, a non GAAP financial measure, as the Company believes that both debt (including off-balance sheet debt) and equity
should be included in evaluating how effectively capital is utilized across the business.
45
46. Cash Flow Reconciliation
($ Millions)
(4)
12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08
Cash Provided by Operating Activities $ 1,023 $ 365 $ 617 $ 803 $ 867 $ 779 $ 854 $ 1,103 $ 1,256
Less: Changes in Balance of Trade Receivables Sold (270) 235 110 - - - - - -
Collections of Direct Finance Leases 67 66 66 61 64 70 66 63 62
Proceeds from Sales (Primarily Revenue Earning Equipment) 230 173 152 210 331 334 333 374 265
Proceeds from Sale and Leaseback of Assets - - - 13 118 - - 150 -
Other Investing, Net 4 (4) 4 4 1 - 2 2 -
(1)
Total Cash Generated 1,054 835 949 1,091 1,381 1,183 1,255 1,692 1,583
(2)
Capital Expenditures (1,296) (704) (582) (734) (1,092) (1,399) (1,695) (1,317) (1,234)
(3)(5)
Free Cash Flow $ (242) $ 131 $ 367 $ 357 $ 289 $ (216) $ (440) $ 375 $ 349
Memo:
Depreciation Expense $ 580 $ 545 $ 552 $ 625 $ 706 $ 740 $ 743 $ 816 $ 843
Gains on Vehicle Sales, Net $ 19 $ 12 $ 14 $ 16 $ 35 $ 47 $ 51 $ 44 $ 39
(1) The Company uses total cash generated, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance.
Management believes total cash generated provides investors with an important measure of total cash inflows generated from our on-going business activities which include sales of
revenue earning equipment, sales of operating property and equipment, sale and leaseback of revenue earning equipment, collections on direct finance leases and other cash inflows.
(2) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment.
(3) The Company uses free cash flow, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. Management
believes free cash flow provides investors with an important perspective on the cash available for debt service and shareholders after making capital investments required to support
ongoing business operations. The calculation of free cash flow may be different from the calculation used by other companies and therefore comparability may be limited.
(4) Amounts have not been recasted to give effect for the impact of foreign exchange movements on cash for which the impact is not expected to be significant.
(5) Free Cash Flow excludes acquisitions and changes in restricted cash.
46
47. Cash Flow Reconciliation
($ Millions)
Forecast
Midpoint
12/31/09
Cash Provided by Operating Activities $ 980
Collections of Direct Finance Leases 65
Proceeds from Sales (Primarily Revenue Earning Equipment) 255
(1)
Total Cash Generated 1,300
(2)
Capital Expenditures (935)
(3)(4)
Free Cash Flow $ 365
(1) The Company uses total cash generated, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance.
Management believes total cash generated provides investors with an important measure of total cash inflows generated from our on-going business activities which include sales of
revenue earning equipment, sales of operating property and equipment, sale and leaseback of revenue earning equipment, collections on direct finance leases and other cash inflows.
(2) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment.
(3) The Company uses free cash flow, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. Management
believes free cash flow provides investors with an important perspective on the cash available for debt service and shareholders after making capital investments required to support
ongoing business operations. The calculation of free cash flow may be different from the calculation used by other companies and therefore comparability may be limited.
(4) Free Cash Flow excludes acquisitions and changes in restricted cash.
47
