Summary of RYDER SYSTEM INC

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
OVERVIEW
The following discussion should be read in conjunction with the unaudited Consolidated Condensed 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 Management's Discussion and Analysis of Financial Condition and Results of Operations included in the 2008 Annual Report on Form 10-K.
Ryder System, Inc. (Ryder) is a global leader in transportation and supply chain management solutions. Our business is divided into three business segments: Fleet Management Solutions (FMS), which provides full service leasing, contract maintenance, contract-related maintenance and commercial rental of trucks, tractors and trailers to customers principally in the U.S., Canada and the U.K.; Supply Chain Solutions (SCS), which provides comprehensive supply chain consulting including distribution and transportation services throughout North America and in South America, Europe and Asia; and Dedicated Contract Carriage (DCC), which provides vehicles and drivers as part of a dedicated transportation solution in the U.S. 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 automotive, electronics, transportation, grocery, lumber and wood products, food service, and home furnishing.
During the fourth quarter of 2008, we decided to discontinue operations in Brazil, Argentina and Chile and transition out of specific SCS customer contracts in Europe. These operations will be reported as part of continuing operations in our Consolidated Condensed Financial Statements until all operations cease. We expect to cease all our operations in South America by the end of the third quarter of 2009 and transition out of SCS European operations by the end of 2009.

ITEMS AFFECTING COMPARABILITY BETWEEN PERIODS
     Accounting Changes
     See Note (B), "Accounting Changes," for a discussion of the impact of
changes in accounting standards.
ACQUISITIONS
     We have completed various asset purchases in the past year, under which we
acquired a company's fleet of vehicles and contractual customers. The FMS
acquisitions operate under Ryder's name and complement our existing market
coverage and service network. FMS acquisitions during 2009 and 2008 were as
follows:

                                                              Contractual
     Company Acquired              Date          Vehicles      Customers         Market
 Edart Leasing LLC           February 2, 2009      1,600             340     Northeast U.S.
 Gordon Truck Leasing        August 29, 2008         500             130      Pennsylvania
 Gator Leasing, Inc.           May 12, 2008        2,300             300        Florida
 Lily Transportation Corp.   January 11, 2008      1,600             200     Northeast U.S.

On December 19, 2008, we completed the acquisition of substantially all of the assets of Transpacific Container Terminal Ltd. and CRSA Logistics Ltd. (CRSA) in Canada, as well as CRSA's operations in Hong Kong and Shanghai, China. This strategic acquisition adds complementary solutions to our SCS capabilities including consolidation services in key Asian hubs, as well as deconsolidation operations in Vancouver, Toronto and Montreal.
The results of these acquisitions have been included in our consolidated results since the dates of acquisition.

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      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                    AND RESULTS OF OPERATIONS - (Continued)
CONSOLIDATED RESULTS

                                 Three months ended June 30,             Six months ended June 30,            Change 2009/2008
                                                                                                             Three          Six
                                 2009                 2008               2009                2008           Months        Months
                                             (In thousands, except per share amounts)

Earnings before income
taxes                        $      41,331               112,675     $     59,482              204,762        (63)%         (71)%
Provision for income taxes          18,443                49,729           29,756               85,735       (63)          (65)

Net earnings                 $      22,888                62,946     $     29,726              119,027        (64)%         (75)%


Per diluted common share
(EPS)                        $        0.41                  1.09     $       0.53                 2.05        (62)%         (74)%


Weighted-average shares
outstanding - Diluted               55,381                57,002           55,331               57,488        (3)%          (4)%

The deterioration in global economic conditions in the past year has resulted in sharply lower earnings for the second quarter and first half of 2009. Earnings before income taxes and net earnings in the second quarter and first half of 2009 reflect significantly lower earnings in the FMS business segment. This was driven by decreased global results in commercial rental, used vehicle sales, and full service lease. In addition, higher pension expense contributed to lower consolidated results. To a lesser extent, earnings were adversely impacted by significantly lower global automotive industry volumes. Net earnings in the second quarter of 2008 included a $6.8 million charge in our SCS operations in Brazil to adjust accruals and tax deferrals related to prior years.
See "Operating Results by Business Segment" for a further discussion of operating results.

                                Three months ended June 30,          Six months ended June 30,          Change 2009/2008
                                                                                                        Three         Six
                                   2009               2008              2009             2008           Months      Months
                                                        (In thousands)

Revenue:
Fleet Management Solutions    $       890,482        1,201,342     $    1,753,118       2,306,953       (26)%        (24)%
Supply Chain Solutions                307,969          440,903            605,446         855,081       (30)         (29)
Dedicated Contract Carriage           116,036          143,732            231,062         280,910       (19)         (18)
Eliminations                          (71,743 )       (125,735 )         (143,822 )      (239,120 )      43           40

Total                         $     1,242,744        1,660,242     $    2,445,804       3,203,824       (25)%        (24)%


Operating revenue (1)         $     1,036,375        1,213,510     $    2,044,439       2,385,218       (15)%        (14)%

(1) We use operating revenue, a non-GAAP financial measure, to evaluate the operating performance of our businesses and as a measure of sales activity. FMS 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 our customers for which we realize minimal changes in profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by 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. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as subcontracted transportation is typically a pass-through to our customers. We realize minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also a primary internal operating metric used to measure segment performance. Refer to the section titled "Non-GAAP Financial Measures" for a reconciliation of total revenue to operating revenue.

Total revenue decreased 25% to $1.24 billion in the second quarter of 2009 and decreased 24% to $2.45 billion in the first half of 2009. The decline in total revenue was due to lower fuel services revenue and lower operating revenue. Fuel services revenue declined due to lower fuel costs and gallons sold. Operating revenue decreased 15% in the second quarter of 2009 and decreased 14% in the first half of 2009 primarily due to lower automotive production volumes, an unfavorable impact from foreign exchange, lower commercial rental revenue, and lower SCS and DCC fuel revenues. Operating revenue was also negatively impacted by lower miles driven by existing lease customers and an increase in customers downsizing their lease fleets. Total revenue and operating revenue in the second quarter of 2009 both included an unfavorable foreign exchange impact of 3% due primarily to the weakening of the Canadian dollar and the British pound. Total revenue and operating revenue in the first six months of 2009 included an unfavorable foreign exchange impact of 3% and 4%, respectively, due primarily to the weakening of the Canadian dollar and the British pound.

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      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                    AND RESULTS OF OPERATIONS - (Continued)

                                Three months ended June 30,             Six months ended June 30,             Change 2009/2008
                                                                                                             Three          Six
                                 2009                 2008                2009              2008            Months        Months
                                                     (Dollars in thousands)

Operating expense
(exclusive of items
shown separately)           $      554,041              843,107      $    1,098,507        1,606,874          (34 )%        (32 )%
Percentage of revenue              45%                  51%                 45%               50%

Operating expense and operating expense as a percentage of revenue decreased in 2009 primarily as a result of lower fuel costs. The reduction in fuel costs over the prior year was driven by a decline in fuel prices as well as a lower number of gallons dispensed.

                                 Three months ended June 30,            Six months ended June 30,             Change 2009/2008
                                                                                                             Three          Six
                                  2009                 2008               2009               2008           Months        Months
                                                     (Dollars in thousands)

Salaries and
employee-related costs       $      314,862              354,043      $     625,120          712,413          (11 )%        (12 )%
Percentage of revenue               25%                  21%                26%                22%
Percentage of operating
revenue                             30%                  29%                31%                30%

Salaries and employee-related costs decreased $39.2 million and $87.3 million in the second quarter and first half of 2009, respectively, because of lower headcount, foreign exchange rate changes and, to a lesser extent, lower incentive-based compensation, commissions and discretionary match into the 401(k) savings plan based on company performance. Lower headcount was driven by reduced volumes in our SCS and DCC business segments and workforce reductions made as part of the restructuring initiatives announced in the fourth quarter of 2008. The decrease in salaries and employee-related costs was partially offset by an increase in pension expense of $15.1 million and $29.8 million in the second quarter and first half of 2009, respectively, caused by significant negative pension asset returns in 2008.

                                    Three months ended June 30,            Six months ended June 30,             Change 2009/2008
                                                                                                                Three          Six
                                     2009                 2008               2009               2008           Months        Months
                                                        (Dollars in thousands)

Subcontracted transportation    $       56,995               93,699      $     109,615          169,030          (39 )%        (35 )%
Percentage of revenue                  5%                   6%                  4%                5%

Subcontracted transportation expense represents freight management costs on logistics contracts for which we purchase transportation from third parties. Subcontracted transportation expense is directly impacted by whether we are acting as an agent or principal in our transportation management contracts. To the extent that we are acting as a principal, revenue is reported on a gross basis and carriage costs to third parties are recorded as subcontracted transportation expense. The impact to net earnings is the same whether we are acting as an agent or principal in the arrangement. Subcontracted transportation expense decreased $36.7 million and $59.4 million in the second quarter and first half of 2009, respectively, as a result of decreased freight volumes in the current economic environment.

                                   Three months ended June 30,            Six months ended June 30,             Change 2009/2008
                                                                                                               Three          Six
                                    2009                 2008               2009               2008           Months         Months
                                                           (In thousands)

Depreciation expense           $      224,569              209,250      $     447,090          415,210             7 %           8 %
Gains on vehicle sales, net            (3,115 )            (10,164 )           (7,088 )        (22,590 )         (69 )         (69 )
Equipment rental                       16,932               20,295             32,539           41,821           (17 )         (22 )

Depreciation expense relates primarily to FMS revenue earning equipment held for use and sale. Revenue earning equipment held for sale is recorded at the lower of fair value less cost to sell or net carrying value. Depreciation expense increased $15.3 million in the second quarter because of increased write-downs in the carrying value of vehicles held for sale of $7.2 million, accelerated depreciation of $2.3 million on certain classes of vehicles expected to be sold through 2010 and the impact of recent acquisitions and

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
higher vehicle investments partially offset by the impact of foreign exchange rates. Depreciation expense increased $31.9 million in the first half of 2009 because of increased write-downs in the carrying value of vehicles held for sale of $12.7 million, the impact of recent acquisitions, higher vehicle investments and an impairment charge of $3.9 million on a Singapore facility partially offset by the impact of foreign exchange rates.
Gains on vehicle sales, net decreased $7.0 million in the second quarter of 2009 because of lower average pricing on vehicles sold. Gains on vehicles sales, net decreased $15.5 million in the first half of 2009 because of lower average pricing on vehicles sold and, to a lesser extent, a decline in the number of vehicles sold.
Equipment rental consists primarily of rent expense for FMS revenue earning equipment under lease. Equipment rental decreased $3.4 million and $9.3 million in the second quarter and first half of 2009, respectively, because of a reduction in the average number of vehicles leased from third parties.

                                    Three months ended June 30,                  Six months ended June 30,                  Change 2009/2008
                                                                                                                         Three              Six
                                    2009                   2008                 2009                  2008               Months           Months
                                                            (Dollars in thousands)

Interest expense               $       37,286                 37,588        $      76,093                75,016              (1)%              1%
Effective interest rate              5.4%                   5.2%                  5.4%                  5.3%

Interest expense decreased $0.3 million in the second quarter of 2009 because of lower average debt balances partially offset by a higher effective interest rate. Interest expense increased $1.1 million in the first half of 2009 due to a higher effective interest rate partially offset by lower average debt balances.

                                                   Three months ended June 30,                Six months ended June 30,
                                                    2009                  2008                2009                  2008
                                                                              (In thousands)

Miscellaneous (income) expense, net            $        (1,453 )              (296 )      $      (1,035 )              1,321

Miscellaneous (income) expense, net consists of investment (income) losses on securities used to fund certain benefit plans, interest income,
(gains) losses from sales of operating property, foreign currency transaction
(gains) losses, and other non-operating items. Miscellaneous (income) expense, net increased $1.2 million in the second quarter of 2009 primarily due to better performance in our investment securities. Miscellaneous (income) expense, net increased $2.4 million in the first half of 2009 primarily due to better performance in our investment securities and lower foreign currency exchange losses.

Three months ended June 30, Six months ended June 30, 2009 2008 2009 2008

(In thousands)

Restructuring and other charges
(recoveries), net $ 1,296 45 $ 5,481 (33 )

Refer to Note (F), "Restructuring and Other Charges (Recoveries)," for a discussion of the restructuring and other charges recorded during the three and six months ended June 30, 2009. We eliminated approximately 30 positions in 2009 as part of our continued cost containment initiatives. We expect to realize annual savings of approximately $5 million from the 2009 workforce reductions in addition to the annual savings of approximately $38 million from the 2008 actions.

                                     Three months ended June 30,                Six months ended June 30,                Change 2009/2008
                                                                                                                       Three            Six
                                      2009                 2008                 2009                 2008             Months          Months
                                                           (Dollars in thousands)

Provision for income taxes      $      18,443                49,729        $     29,756               85,735            (63 )%          (65 )%
Effective tax rate                         44.6%                44.1%                50.0%               41.9%

Our effective tax rate for the second quarter and first half of 2009 increased due to the impact of non-deductible expenses on lower projected pre-tax earnings.

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      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                    AND RESULTS OF OPERATIONS - (Continued)
OPERATING RESULTS BY BUSINESS SEGMENT

                               Three months ended June 30,          Six months ended June 30,           Change 2009/2008
                                                                                                       Three         Six
                                  2009               2008              2009             2008           Months       Months
                                                       (In thousands)
Revenue:
Fleet Management Solutions   $       890,482        1,201,342     $    1,753,118       2,306,953       (26 )%       (24 )%
Supply Chain Solutions               307,969          440,903            605,446         855,081       (30 )        (29 )
Dedicated Contract
Carriage                             116,036          143,732            231,062         280,910       (19 )        (18 )
Eliminations                         (71,743 )       (125,735 )         (143,822 )      (239,120 )      43           40

Total                        $     1,242,744        1,660,242     $    2,445,804       3,203,824       (25 )%       (24 )%


Operating Revenue:
Fleet Management Solutions   $       711,797          773,907     $    1,404,115       1,520,894        (8 )%        (8 )%
Supply Chain Solutions               253,492          349,655            500,639         691,655       (28 )        (28 )
Dedicated Contract
Carriage                             113,518          141,281            226,254         275,306       (20 )        (18 )
Eliminations                         (42,432 )        (51,333 )          (86,569 )      (102,637 )      17           16

Total                        $     1,036,375        1,213,510     $    2,044,439       2,385,218       (15 )%       (14 )%

NBT:
Fleet Management Solutions   $        41,759          115,792     $       72,165         207,230       (64 )%       (65 )%
Supply Chain Solutions                 2,759            6,794                736          15,107       (59 )        (95 )
Dedicated Contract
Carriage                              10,655           12,410             20,922          23,726       (14 )        (12 )
Eliminations                          (4,806 )         (7,668 )          (10,450 )       (15,186 )      37           31

                                      50,367          127,328             83,373         230,877       (60 )        (64 )
Unallocated Central
Support Services                      (8,260 )         (8,110 )          (15,187 )       (19,650 )      (2 )         23
Restructuring and other
charges, net and other
items                                   (776 )         (6,543 )           (8,704 )        (6,465 )      NM           NM

Earnings before income
taxes                        $        41,331          112,675     $       59,482         204,762       (63 )%       (71 )%

As part of management's evaluation of segment operating performance, we define the primary measurement of our segment financial performance as "Net Before Taxes" (NBT), which includes an allocation of Central Support Services (CSS), excludes restructuring and other charges, net, described in Note (F), "Restructuring and Other Charges (Recoveries)," and excludes the items discussed in Note (R), "Other Items Impacting Comparability" in the Notes to Consolidated Condensed Financial Statements. CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services and public affairs, information technology, health and safety, legal and corporate communications. The objective of the NBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment and each operating segment within 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 the periods presented. Certain costs are considered to be overhead not attributable to any segment and remain unallocated in CSS. Included within the unallocated overhead remaining within CSS are the costs for investor relations, public affairs and certain executive compensation. See Note (S), "Segment Reporting," in the Notes to Consolidated Condensed Financial Statements for a description of how the remainder of CSS costs are allocated to the business segments.

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