Good morning and welcome to Ryder System Incorporated third quarter 2010 earnings release conference call. All lines are in a listen-only mode until after the presentation. (Operator Instructions) Today’s call is being recorded, if you have any objections please disconnect at this time. I would like to introduce Mr. Bob Brunn, Vice President of Investor Relations and Public Affairs for Ryder. Mr. Brunn you may begin.

Thanks very much. Good morning and welcome to Ryder’s third quarter 2010 earnings conference call. I like to begin with a reminder that in this presentation you will hear some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectation and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market, political, and regulatory factors. More detailed information about these factors is contained in this morning’s earnings release and in Ryder’s filings with the Securities and Exchange Commission. Presenting on today’s call are Greg Swienton, Chairman and Chief Executive Officer; and Art Garcia, Executive Vice President and Chief Financial Officer. Additionally, Robert Sanchez President of Global Fleet Management Solutions; and John Williford, President of Global Supply Chain Solutions, are on the call today and available for questions following the presentation. With that, let me turn it over to Greg.

Thanks, Bob, and good morning, everyone. Today we’ll recap our third quarter 2010 results, we’ll review the asset management area, and discuss our outlook and forecast for the year. After our initial remarks, we’ll open up the call for questions. Before we get into the results I would like to make a brief comment related to some recent management changes here at Ryder. Tony Tegnelia will be retiring from Ryder early next year after a 33 year career with out company. Tony’s contributions have been invaluable to the organization, having had key leadership roles in finance, supply chain and more recently leading FMS. While Tony will be with the company for several more months working on acquisitions and other strategic initiatives. I wanted to take this opportunity to publicly thank in personally for his outstanding service to our company and to our shareholder over the years. Most of you on the call already know Tony’s successor as president of Global Fleet Management Solutions, Robert Sanchez who was formerly our Chief Financial Officer. The combination of Robert’s prior experience in running fleet management’s operations and as our corporate CFO will enable him to continue to lead the FMS business to new levels of performance in the future. Replacing Robert is Chief Financial Officer, is our former controller Art Garcia and some of you have met him already and if you haven’t met him, you will be seeing much more of him at investor events in the near future and I am particularly pleased that we have had such a strong internal members of our team in order to step up and fill these key leadership positions in the company and look forward to all of their contributions and there new roles. So now let me get into an overview of our…

Thanks Greg. Turning to page 11, year-to-date gross capital expenditures totaled $895 million up by $426 million from the prior year. We expect full year gross capital spending to be inline with our prior forecast of approximately 1.1 billion. Year-to-date spending on leased vehicles was up by $68 million from the prior year both UV sales and existing lease renewals have improved over the prior year and are ahead of plan. Capital spending on commercial rental vehicles was 358 million year-to-date, primarily due to refreshment of the rental fleet as well as some modest gross spending. This was an increase of $352 million over last year since in 2009; we spend virtually no capital on rental vehicles due to a weak economy. We realized proceeds primarily from sales of revenue earning equipment of $162 million year-to-date, up by $11 million from the prior year. The increase reflects higher used vehicle pricing partially offset by fewer units sold. Including proceeds from sales year-to-date net capital expenditures were $733 million up by $415 million from the prior year. Turning to the next page, we generated cash from operating activities of $804 million year-to-date, up by $35 million from the prior year. Depreciation decreased by $37 million due to a smaller fleet, and lower adjustments in the carrying values of used vehicles. These items more than offset higher depreciation resulting from higher average vehicle investments, lower residual values and accelerated depreciation rates on certain vehicles. Including the impact of used vehicle sales, we generated over $1 billion of total cash year-to-date, that's up by $43 million from the prior year. Cash payments for capital expenditures were $861 million, up by $352 million from the prior year, reflecting higher vehicle purchases, and the timing of vehicle received from OEMs. Including our cash capital spending,…

Okay, thanks Art. Page 15 summarizes key results for our asset management area globally. At the end of the quarter, our globally used vehicle inventory for sale was 4700 vehicles, down by 3100 units from the third quarter 2009 and down by 1200 units sequentially from the end of the second quarter 2010. We sold 4400 vehicles during the quarter, down 15% from the prior year due to our smaller inventory available for sale. We saw continued strength and used vehicle demand and pricing in the third quarter. And this strength has continued into October. Improved demand is a result of both relatively better market conditions and the desire of some truck buyers to obtain pre 2010 engines. Stronger demand combined with our lower inventory level has allowed us to up price generally and to increase the proportion of retail sales where we realize better prices. Compared to the third quarter 2009 proceeds per vehicle were up 24% on tractors and up 50% on trucks. From a sequential standpoint tractor pricing was up 7% and truck pricing up 14% versus the second quarter this year. At the end of the quarter approximately 6,900 vehicles were classified as no longer earning revenue. This was down by 41,100 units or 37% from the prior year and down 14% from the second quarter 2010. And that decrease reflects fewer units held for sale and an improvement in rental utilization. We've continued to successfully implement our strategy to increase the number of lease contracts on existing vehicles that are extended beyond their original lease term. The number of these lease extensions in the US year-to-date was up by 1,500 units or 28% versus the prior year. Increasing lease extensions is a beneficial strategy in the current market environment, as it retains the revenue stream…

Thank you. (Operator Instructions) Our first question today is from Kevin Sterling with BB&T Capital Markets. Your line is now open. Kevin Sterling - BB&T Capital Markets: Greg can you walk us through how the lease miles driven per vehicle progress throughout the quarter?

I know how it's kind of moved up from quarter-to-quarter but I think Robert has the detail by month.

Yes, Kevin by month it was up 5% in July, 1% in August and 3% in September. So, as we stated before, one month is a little bit tight in terms of comparing year-over-year. But generally what you can see is that regardless to the month that was up each of the months. Kevin Sterling - BB&T Capital Markets: Looking at lease prices today compared to last year. How much are they have today compared to last year?

On a lease price for a customer? Kevin Sterling - BB&T Capital Markets: Yes.

Generally year-over-year which we are seeing is the impact of the new EPA technology and that is generally 10 to 15% increase. Kevin Sterling - BB&T Capital Markets: Okay thank you and one last question. Do you plan to grow the commercial rental fleet with the streets you’re seeing in commercial rental this year? Do you have enough power units? We expect to end the year little bit higher than we had originally estimated. That is being done by some additional units that we bought early in the unit we talked about in the call last time. And the fact that we are going to hang on to some of the vehicles that we had originally expected to out service in the third quarter we hung on to some of those units over the season in order to be able to meet the demand we are seeing. Okay great thanks for your time I will get back in line and turn it over to someone else.

And your next question is from Todd Fowler with Keybanc Capital Market your line is now open.

Great thank you good morning everybody and I guess congratulations to Tony, Robert and R. Greg along the assumed line to Kevin's question can you talk about the commercial trends during the quarter. Basically kind of what you saw in a sequential basis and what you seen so far here in October. I think we have had continued strength all through the third quarter and it continues to the fourth quarter. And if Robert you have anything specific by month you can share that. But I would say that for all of the factors that we listed supply demand situation, reluctance maybe to commit to longer term and use more rental the cost of, the big cost jump up and you EPA mandated 2010 engine cost I think rental is probably not only been strong but we expected to stay strong. So that is something we will continue to monitor I think that unless you have a good economic forecast beyond two quarters you don't know for sure and we'll be monitoring that closely but I think it has been strong and will continue to be strong which is a reflection of why we've let the fleet grow and expect it to grow by year end compared to our original forecast when we thought it would be flat.

[Todd] it's been up close to 80% since May, so we've had good performance each month. Usually we see in the fourth quarter things slow down a little bit seasonally but still we expect it to be relatively strong and up near that 80%.

Robert what you are saying is that the utilization has been close to 80% every month since May.

That's correct.

Okay. And with the seasonality in the fourth quarter you still think that you can achieve some thing close to where you were from utilization standpoint in the third quarter on the rental fleet?

Right. We expect to be on a little bit but still relatively close to where we were.

Okay perfect that's helpful. And then as a follow-up the stabilization that you are seeing within the size or the trends that are in the full service lease business is that being driven more by a slow down in the attrition that you are seeing from your current customers or is it more of a function of seeing some lease writing activity come through and putting more vehicles in this service or is it a little bit above it?

I'd say it's a little bit above. Clearly the fleet reductions that have been going on during the economic down turn have diminished, slowed down and some what stabilized and in addition therefore also the new sales activity we've been doing actually then tends to show up more. So hopefully we have been at and close to the bottom and some time in the future call soon we hope to talk about an increasing fleet count.

Okay, nice quarter good luck. I will get back in line.

Our next question is from David Ross with Stifel Nicolaus

You mentioned the dedicated side that there was increased driver costs during the quarter, and that should be a headwind going forward. Can you talk a little bit about the reason for the driver cost increase, is it for recruiting, retention, higher wages, what kind of pay increase it might be.

Yeah this came on pretty sharply at the very end of the second quarter and persisted. The financial impact comes from leasing drivers instead of hiring them and so that's about a $500,000 for the quarter. We kind of expect to see this continue the overall driver shortage continue and maybe even get a little worse. We are doing a lot of things to mitigate these financial impact including hiring more recruiters and reaching out potential drivers in new ways but this driver shortage I think is with us for a while.

And are there different markets where it's harder to get drivers than others; is it kind across the board? I would think that a dedicated operation would actually be more attractive to most drivers than typical trucking companies?

I am not aware of any regional difference we are seeing with our kind of drivers and dedicated fleets that the driver generally return home at night so we have pretty good jobs for drivers. Unlike, we said we are doing a lot to mitigate the impact to us but this is really a national issue right now.

And then on used vehicles sales, you mentioned used truck pricing is much stronger than used tractor pricing, or at least it's rebounded sharper over the past several months and quarters. Is there any type of reason for that, the difference in the two markets? Did truck get hit harder, and that's why it's bouncing back more.

You broke up a little bit on the call but I think I got most of it, I think the demand is due to a number of factors. There is still compared to last year and last periods and economic rebound, I think many that can utilize use trucks are in the market. In our case we have a lot fever in inventory because fewer have been coming off of service, so we've maintained the size of the rental fleet and up a little bit so those units haven't been going to the used truck centers where we have extended leases. Those units haven't gone to the used truck centers so our availability is a little bit lower and the demand is up and I think anyone who is also sensitive to the new EPA mandated engines and there in the shocking sticker prices that goes with it if they can utilize a used vehicle they will try to do it and I think there is a lot of factors that contribute.

Sorry if I broke up, the question was more for the truck pricing versus tractor pricing, and why truck is, the used vehicles sales on the truck side are better than on the tractor side?

So, Robert do you want to comment?

I think the key point there trucks versus tractors is that trucks went actually declined, their decline started sooner and they were deeper. It was deeper than trucks, than tractors. So trucks I think have more room to move up then it come down more. And we are seeing -- we have seen that pickup certainly over the last several quarters and with strong demand stronger pricing. Tractors seem to have picked up a little bit -- went down a little less and picked up a little bit later in the cycle.

Our next question is from Jon Langenfeld with Baird your line is now open.

Hi good morning gentlemen this (inaudible) for John, if I could just start on that lease thing comment but little bit more and you have talked about stability in that market. I mean certainly the least fleet continues to contract I think you have been targeting year end before you saw some stabilization at least in that lease side. Is that still the expectation kind of taking into account the CapEx is unchanged but looks like you will have incremental dollars being spend on the commercial rental side maybe at the expense of lease? But can you talk a little bit about timing of when we should start to see that, that lease fleet bottom.

I think we are similar to where we were on the last call that that we expect to see stabilization meaning really bottoming out if will words the lease weight is no longer declining in the several quarters and you saw this quarter we were down on average I think 400 units and we expect of a pretty large base we expect that to really continue for the next quarter to and then begin to see some increases in the fleet in the second half of 2011. So mid next year we would expect to begin to some line of improvement. Now that could move depending on how quickly our customers decided they want to start leasing how the confidence in the economy starts to look. But right now we are estimating some point middle of next year.

Okay good on the extension side obviously the early terminations numbers have come in the extensions are up. Is that simply the expiration of contracts coming provision and entering into (inaudible) on the fact that those are all the existing contracts that were ahead exploration that are being re-negotiated can you talk a little bit about that mix.

There is both in the extensions and you have some that are getting to the end of their term. They have got the near term and then get extended and some that are being done several months prior to that extension but as you can see overall we are seeing customers that are really interested in extending the units that they have because with that they are able to avoid the investment in the newer technology. We expect that trend to continue certainly going into the balance of the year and probably going into next year.

Okay good and one last one on the pension side. I know what's there like when we think about 2011 and the potential impacts on puts and takes obviously you changed the pension plan asset prices are up but interest rates are down. So very early read in the 2011 but how should we think about the direction of impact or benefit next year for 2011 pension [loan] this year?

I will let Art answer precisely, but I think if the market closed and where it is around today or yesterday and where December 31 and we are doing the calculation and interest rates where they were. It might benefit us on the P&L next year by about $1 million, there are plenty of shares. I think that's right but [Garcia is over there].

Right Greg I think based on current asset levels and trying to factor in the impact of lower discount rates we think we may be slightly better year-over-year. But to Greg's point this is a year end calculation but there is a lot of items that still need to happen by the end of the year and that could clearly impact the number.

Thank you our next question is from Alex Brand with Stephens Inc. your line is now open.

First think about the cycle and getting back to peak earnings and kind of qualitatively how you think and this cycle feels a little different to me, and I'm just wondering if you're thinking? Are you surprised that you're not getting more fleet renewal activity to take place at this point of the cycle? And what do you need to see in order to get back on your peak earnings run rate, in the next couple of years?

I would say at this point we are not surprised, I think if you would have asked this a couple of years ago about a predictive model from the way things used to be, we would have expected rental to be strong as it is and maybe not even a strong and some of the lease commitments to kick in. I think this is an issue beyond us, it is an issue of consumer confidence and business confidence and there willingness to signup for longer term deals I think is a total reflection on where the believe the economy is going and how there business maybe impacted by pending taxes, uncertainty in regulation. So they are going to be cautious. I think as soon as things clear up and they understand how things look and they see certain economic recovery even if it is multi-year bumpy and little erratic then I think they are going to ready to sign up for longer term deals. If you throw in the other factor into the soup which is a big price increase in 2010 EPA mandated engines and you think that many customers have recalled it many customers bought before 2007, they are now facing a 2007 and a 2010 EPA mandated engine cost and that gets to be rather staggering. So, given uncertainty in big price increases in your choice to sign a long term deal or work on something short term, the logic on the part of the customers and potential customers I’ll do a little more rental. Now for our business model that doesn’t necessarily harm what you describe is us getting back to our peak earnings because what we may find is even though what I have described maybe true we are probably going to have a bigger and longer horse to ride on rental before lease kicks in. it eventually will but the timing compared to past periods would be different.

And if it continues this way, which makes sense, where you have less commitment to long-term on the part of your customers, but you brought rental is unusually good for a cycle. Is that a slight positive for the cash flow outlook, or does it not matter, because you end up having to invest in a similar number of trucks either way?

It probably doesn’t matter too much on capital expenditures and cash flow because if lease is a little softer and rental stronger then we are going to be doing more refreshment, more renewal and more additions. But over the long run that will shift and you will be spending more on lease. Now it’s not a bad sign for us when we see an increase in demand in CapEx for lease because you know that that’s long term certain revenue earnings in future cash flows. But we will play this the best we can given the hand that we are being dealt that I described little bit earlier.

Thank you. Our next question is from Ed Wolfe with Wolfe Trahan. Your line is now open.

I just want to be clear; on the EPS guidance you gave the 58 to 63 or is it 60 to 65 are you excluding the two sets of debt extinguishment are including it in that.

It is all in there so we are seeing 58 to 63 and includes that.

Okay so on an ongoing basis really 60 to 65 though. I think the you call it debt extinguishment what we are trying to highlight is that the additional interest expense associated with empty and insurance we completed in September.

And it is ongoing.

Can you talk a little bit about gains on sales going forward you know it seems like it is going to be trend of fewer units and rising prices. How do we think about $7 million versus this quarter going forward directionally?

I think you can probably expect to continue in that range it 66 in the second quarter just under seven and in the third. So I would expect that to continue the only offset would be that we obviously have fewer units to sell maybe for the next few quarters. But I think in terms of quarterly modeling and probably looking around that $6 million to $7 million range.

And why just, why does it replenish a few quarters from now. How do you think about that, well you got the rental fleet that we renewed we usually as I mentioned earlier we hold on the vehicle, we are holding on the vehicle in the third and fourth quarter? Those units will going to used truck centers towards the tail end of the year and will be sold in the first half. So you will have a few more to sell starting in the first and second half. And with just one kind figure picture cluster rag how quickly you can reduce the commercial rental unit its economy would have slow materially next year. How quickly can you get the trucks out that you’ve brought in and what would that process look like?

Well you probably do it in several ways. Some you would move to the used trucks center, some you could move in to service and dedicated contract carriage, some you could move into shortened lease service, so you got a lot of options and choices that in the tough economy might be a good thing for us to do. And customers would respond well of that.

Thank you our next question is from Art Hatfield with Morgan Keegan, your line is now open.

I kind of jump on the call late. So if I am asking you to repeat something I apologize upfront but when I heard some of your comments on the extensions and I haven’t had a chance to go back and look at prior quarters but did that rate of number of customers wanted to do extensions or that number of total extensions, did it slow it all in Q3?

No, it hasn’t. And in fact when you get a moment and you look at the appendix in the PowerPoint on page 29 you will see on a year-to-date basis that compared to four years ago those quantities have doubled and they have stepped up each of the last three difficult periods and I think they have been strong during all of the months of the most recent quarter as well.

I was looking at that but I wasn’t sure how well it played out in Q3 specifically. So that’s helpful. The other thing is on the commercial rental fleet and I was a little bit surprised by the fact that I know that you are investing in that fleet this year but the average fleet kind of 31.1 in the quarter had dropped down to 39 at the end of the quarter. Can you explain what was going on there and then kind of a part B to that I will be done, is 79.2 utilization, is that theoretically, can you get that -- is it even possible to get any better than that?

Let me answer the last part first and then Robert can talk to you about the fleet. Since I think as you know but just for the benefit of everyone on the call when we calculate that percent that’s based on a 7 day week, even though commercial customers off and use it Monday to Friday and we also count the units that are out for service. So it’s a pretty rigorous denominator. When you get to where we are, you are virtually renting those right through the weekend to a great degree and to a greater degree in the past and I think that, that shows a little bit of strength of recovery but its also supply and demand. A customer that might normally it Monday to Friday, may keep it over the weekend to ensure that they have it on Monday, instead of returning it on Friday because at these levels you do find a lot of lots begin to empty especially if you want a particular kind of vehicle so that sort of a theoretical max and you really cant get much higher than that without turning away customers at certain locations. This is a national average, so that means some are even higher. So that’s kind peak

Your question around the fleet, it is down the ending fleet was down a couple of hundred units from the average but that’s mainly due to just normal adds and flows within the fleet. As an example, one of the things that we are doing is leasing some units out of the (inaudible) fleet for customer that are interested in those. So at any given month you might have a few more going out and what came in that month but you can see quarter-over-quarter we roll up 100 units from quarter end to quarter end and from the beginning from March it was [2088] so we are up just over 2000 units from end of the first quarter. Art Hatfield - Morgan, Keegan & Company: Are you going to be taking net deliveries in the quarter, so at the end of the Q4 that number will be higher again?

Normally what happens in Q4 is we bring it down a little bit because you have got to get the fleet down at a right size going into the first quarter, you are not too over fleet and so we will probably be moving some units towards the tale end of the year into the used truck center so the ending fleet is probably going to be down from what you are seeing today. Art Hatfield - Morgan, Keegan & Company: So you manage it, you manage it down just through the natural attrition process.

Correct.

Thank you. Our next question is from Matt Brooklier with Piper Jaffray. Your line is now open.

When I look at your guidance for the fourth quarter, let's take the mid-point here, it's suggesting you guys are going to be roughly, let's say $0.10 or $0.11 down from the continuing number you reported in 3Q. Yet historically, third and fourth quarter pretty much look similar from an earnings perspective, especially into recovery and off of a bottom. I guess my question here is, as we move from third quarter to fourth quarter, are there some incremental cost headwinds or some utilization issues that would drive earnings down from the third quarter number?

If you look back overtime and you compare enough 4Q to 3Q, you will notice that there tends to be a dip more than a flatness and last year the change of fourth quarter from third quarter was also down $0.10 and that’s sort of the range that we are looking at this year. Now some couple of items are very specific. The $0.4 from tax we don’t expect to recur and $0.2 from interest cost from the medium term note that is more expensive than interest than commercial paper. Apart from that you just don’t know how strong seasonally the fourth quarter will be. If it is a strong holiday season things are going well and rentals are hot then you may not see as much of a decline. But it is hard to know exactly in advance yet. So couple of things we know specifically in a couple we have to guess at. And if it is not quite as robust as it was in the third quarter that will be slightly lower and that kind of get you to that 10 centers difference from the third quarter.

Central support cost takes up in the quarter what was driving that.

Just higher compensation cost and professional services I think on a go forward we are putting probably more in line with prior quarter at $9 million to $10 million probably.

Thank you and our next question is from David Campbell – Thompson, Davis & Company your line now open. David Campbell – Thompson, Davis & Company: Greg and answer to your previous question about the fact that this cycle may include more commercial rental growth then normally and less full service lease growth. Does that potentially in the long run increase our utility the earnings or make them less predictable given the fact that the commercial renters couldn’t go down pretty fast.

Well I think this is more of a short-term phenomenon that is talking about the difference between the recoveries from our products versus historical. I think that over time and even as we get through this particular period of uncertainty the norm will return and we will have I think the same predictability that comes from predominantly contractual revenue in earnings base and that service well in the downturn and it will service well as things ramp up again. We just think in this case the commercial rental will be stronger, longer before you see a big up turn in lease. David Campbell – Thompson, Davis & Company: Which would be theoretically put in to 2012 estimates?

Yeah, by early 2012 is when we’d really expect from what we know today is when you’d really see the significance of lease and rental would be expected to be quite strong through then and that’s based on the fact that we normally have a couple of quarters of visibility. We are nearing the end of this year. If things began to pick up and you sold business in to the end of the first-half of 2011 it will start showing up by the end of `11 and into `12 and that’s kind of the expectation.

Thank you. Our final question today is from David Ross with Stifel Nicholas, your line is now open.

Yes just on the supply chain solution side you said its higher self insurance cost I guess the cost increase in the quarter, can you talk a little bit more about that that’s typically not something that are not asset base carrier I guess is involved in or has material impact?

The self insurance costs?

Correct.

Yeah, I will let John Williford cover that.

I think you are breaking up a little bit but in SES yes, self insurance cost were up a little bit about half of that is from rebates in the prior year that didn’t reoccur and a big part, rest of that is from ongoing claims that go into prior years so I would say maybe half of that disappear in future quarters and that would reflect in normal run rate. And you said it normally wouldn’t be an SES, we have a fair amount of drivers in SES, mainly in our automotive vertical.

Thank you this does conclude our Question-and-Answer Session. I would now like to turn the call back over to Mr. Greg Swienton for closing remarks.

I believe we have answered all questions that were for everyone in queue and thank you for holding the questions and for those of you were then willing to get back in so we are just at noon time. Thanks for your participation, have a good safe day. Bye now.

Thank you. This concludes today’s conference. Thank you for participating. You may disconnect at this time.