Filed by FedEx Corporation Pursuant to Rule 425
under the Securities Act of 1933
and deemed filed pursuant to Rule 14d-9 under
the Securities Exchange Act of 1934
Subject Company:American Freightways Corporation
Commission File No. 000-17570
Date: November 13, 2000
THIS IS A CORRECTED VERSION OF A PREVIOUS FILING.
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6 FedEx Corporation CONFERENCE CALL
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8 Dated: November 13, 2000
9 10:09 a.m.
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14 By Amy Klein - Court Reporter
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2 Good morning, ladies and gentlemen,
3 and welcome to the FedEx Corporation conference
4 call. At this time all participants have been
5 placed on listen only mode and we'll open the
6 floor toward questions and comments toward the
7 end of the presentation.
8 Now at this time it's my pleasure to
9 turn the floor over to today's host Mr. Jim Clippard,
10 Vice President of Investor Relations, FedEx Corporation.
11 MR. CLIPPARD: Thank you very much,
12 Angelo, and welcome, ladies and gentlemen, to the
13 FedEx Corporation conference call. I'm Jim
14 Clippard. As you know this call is to discuss
15 today's announcement that FedEx Corporation has
16 entered into a definitive agreement to acquire
17 American Freightways Corporation, a regional less-than-truckload
18 (LTL) carrier with a strong presence throughout the
19 Midwest, South and Northeast. We issued the
20 press release announcing this agreement today at
21 7 a.m. eastern standard time and it is available
22 on our website at fedex.com and on First Call.
23 This call is also being broadcast over our
24 website and will remain on our site for
25 approximately two weeks.
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2 I want to remind all listeners that
3 FedEx Corporation desires to take advantage of
4 the safe harbor set forth in the Securities Litigation
5 Reform Act. Certain statements made by us during this
6 call may be considered forward looking statements
7 such as statements relating to management's views
8 with respect to future events and financial
9 performance. Forward looking statements are
10 subject to risks, uncertainties and other factors
11 which could cause actual results to differ
12 materially from historical experience or from future
13 results expressed or implied by such forward
14 looking statements. Potential risks and
15 uncertainties include but are not limited to
16 economic and competitive conditions in the
17 markets we serve, matching capacity to value --
18 inaudible-- corporations and its subsidiaries, press
19 releases and filings with the SEC. We have
20 executives here today who will play key roles
21 in the transaction. After their remarks we
22 will open it up for Q and A.
23 I will now turn the call over to FedEx
24 Corporation Executive Vice President and Chief
25 Financial Officer Alan B. Graf Jr.
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2 Alan?
3 MR. GRAF: Thank you, Jim, and good
4 morning everyone. We certainly appreciate your
5 attendance on this call today. I'm going to lay
6 out a few ground rules about this conference call and
7 then I'm going to highlight the very detailed
8 press release which we issued this morning.
9 The ground rules are we are not going
10 to comment on the current quarter's business
11 activities of either FedEx Corporation or
12 American Freightways other than reiterate to you
13 what we stated in the press release, and I
14 quote "Fedex Corporation and American
15 Freightways stated that they were both
16 comfortable with the First Call consensus
17 earnings estimates for their current quarters" -
18 that would be 64 cents for FedEx Corporation and
19 52 cents for American Freightways.
20 Now the rest of this call is going to
21 be limited to this transaction and I hope you
22 will respect that.
23 The highlights as I see them are as follows:
24 The boards of directors of both companies have
25 unanimously approved a definitive agreement in
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2 which FedEx Corporation will acquire American
3 Freightways Corporation for $28.13 per share or $1.2 billion
4 transaction including assumed debt payable in
5 cash and stock of FedEx Corporation. The
6 acquisition will be structured as a two-step
7 transaction. FedEx Corporation will first make a
8 cash tender offer for up to 50.1 percent of the
9 outstanding shares of American Freightways at a
10 price for $28.13 per share. We expect to file a
11 tender offer later this week or early next week.
12 Once filed, the offer will remain open for a
13 minimum of 22 business days. We expect the offer
14 to be completed in mid December.
15 Following the completion of the tender
16 offer, American Freightways will merge into a
17 newly created subsidiary of FedEx Corporation.
18 American Freightways shareholders who do not
19 tender their shares in the first step will
20 receive FedEx shares in the merger at a value of
21 $28.13 per share. Actual FedEx shares issued
22 will be determined based on 10 days randomly
23 chosen by lot from the 20-day period ending five
24 trading days prior to the closing. I will repeat
25 that.
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2 Actual FedEx shares issued will be
3 determined based on ten days randomly chosen by
4 lot in the 20-day period ending five trading days
5 prior to the closing.
6 A merger is expected to be completed
7 in the first calendar quarter of 2001 and will
8 require approval from the American Freightways
9 shareholders. We are actually targeting a date
10 of March the 1st but there can be no assurances
11 that we will actually meet that date.
12 The transaction will be accounted for
13 on a purchase basis with goodwill amortized over
14 a 40-year period.
15 The merger is subject to approval by
16 American Freightways' stockholders and to a Hart-
17 Scott-Rodino review by the U.S. government. We
18 anticipate receiving HSR clearance prior
19 to the closing of the tender offer.
20 American Freightways founder and
21 Chairman Sheridan Garrison who you will hear from
22 later will become a member of the FedEx
23 Corporation board of directors and will become
24 Chairman Emeritus and remain founder of American
25 Freightways.
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2 Doug Duncan who is the current
3 President and CEO of Viking will become the
4 President and CEO of a new LTL freight group
5 overseeing both Viking and American Freightways.
6 Tom Garrison who you will also hear
7 from later will continue as President and Chief
8 Executive Officer of American Freightways.
9 Tilton Gore who is the current
10 Senior Vice President of Viking will replace Doug
11 Duncan as President and CEO of Viking.
12 This transaction will create the
13 second largest regional less than truckload
14 freight unit in the United States with combined
15 revenues of $1.6 billion. American Freightways
16 has a solid balance sheet, profitable operations
17 and excellent people at every level of their
18 organization. We believe they are a perfect fit
19 for the FedEx Corporation network of companies.
20 We have arranged a $750 million
21 line of credit led by Chase Bank for the cash
22 portion of the transaction and for refinancing American
23 Freightways's debt should we elect to do so. We
24 anticipate using the line to back up the
25 commercial paper which we will issue. We
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2 anticipate our debt rating will be affirmed by
3 Moody's and S&P at Baa2 and BBB,
4 respectively. We have sufficient shares of
5 treasury stock to complete the merger.
6 We anticipate reporting a separate LTL
7 freight group segment in the FedEx Corporation
8 fiscal fourth quarter.
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10 We have no plans to merge Viking and
11 American Freightways but we do plan to explore
12 all opportunities for synergies. For example,
13 business that previously went to competitors can
14 now stay in the family.
15 While I'm not going to forecast
16 specific financial numbers I will tell you that
17 we expect this deal to be accretive in FedEx's earnings
18 immediately. In summary, this is a fabulous transaction
19 for employees, customers and stockholders. We are all
20 extremely excited about it and we are confident
21 it will be approved.
22 FedEx Chairman Fred Smith is here with
23 us this morning and I would like to turn it over
24 to him to give you the strategic overview of the
25 transaction.
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2 MR. SMITH: Thank you, Alan. As you
3 said, we believe this pending acquisition is
4 great news for stockholders, customers and
5 employees of both companies. It's a great fit
6 geographically. Matching Vikings' Western U.S.
7 leadership with American Freightways strong
8 presence throughout the Midwest, South and
9 Northeast. It's a great fit for our customers
10 with a broadened FedEx portfolio of services
11 which is unmatched by any competitor. It's a
12 great fit culturally as American Freightways
13 associates like all FedEx people are absolutely
14 positively dedicated to providing the most
15 reliable service available to our customers. I
16 should note that we will continue our "operate
17 independently, compete collectively" strategy and
18 this acquisition follows our corporate objective
19 of growing our logistics and freight businesses.
20 Outside industry observers believe
21 that the regional LTL market will grow by nearly
22 10 percent per year in terms of revenue over the
23 next five years.
24 I'm particularly pleased to have
25 Sheridan Garrison on the call with us this
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2 morning. Sheridan's a gentleman whom I've come
3 to know and admire greatly. He will have a
4 critical role in the future direction of our
5 companies as he will be joining us on the FedEx
6 Corporation board of directors and, as Alan
7 mentioned, he will serve as the Chairman Emeritus
8 and founder of American Freightways. Sheridan, I
9 turn it over to you.
10 MR. GARRISON: Okay, Fred. Thank
11 you. I appreciate your comments and let me
12 assure you that the admiration is mutual.
13 This is indeed an exciting time for
14 the American team. For quite some time Fred and
15 I drifted back and forth about the benefits that
16 would result from this combination, benefits for
17 customers, associates and shareholders. Very rarely
18 does one see a combination of winners such as
19 we have here. We share many traits, key to all this is
20 our commitment to our customers and our commitment to our
21 people. I look forward to being part of this new
22 dynamic organization. We will be busy but we'll
23 have a lot of fun. We also have Tom Garrison on
24 the call and he will further expand on the
25 benefits of this combination before Jim opens it
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2 up for questions. Tom?
3 MR. TOM GARRISON: thank you --
4 I am very excited by this transaction. It's going
5 to be a lot of fun. It's going to be a challenge, it's going
6 to be a lot of work and it's going to be very
7 rewarding outside what we're going to do for our
8 customers and for our associates. It really couldn't
9 come at a better time because we're exploring how
10 we're going to open on the West Coast. The Viking
11 and AF service territories match up perfectly, almost like
12 two pieces of a puzzle. Both AF and Viking have built strong
13 LTL networks in their respective markets, focusing on the
14 next day business and second day interregional business and
15 each delivers outstanding customer satisfaction by providing
16 rapid delivery times, broad coverage areas and
17 courteous friendly service. For our customers
18 this combination will allow us to offer West Coast
19 regional service for less (inaudible), so our employees inclusion
20 in the FedEx family will offer significant opportunities
21 as we combine strengths and produce incremental
22 profit growth. Jim?
23 MR. CLIPPARD: Thank you, Tom. We are
24 now ready for the first question. Please
25 remember to limit your questions to those of a
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2 strategic nature concerning this transaction.
3 We'll refer all questions for this quarter's operations until
4 the second quarter conference call on
5 December the 20th.
6 Angelo, if you would start the
7 question process.
8 ANGELO: Thank you, sir. The floor is
9 now open for questions. If you have a question or a comment at this
10 time, please press the number one followed by four on your touchtone
11 phone. Now if at any point your question is answered you can remove
12 yourself from the queue by pressing the pound(#) key. And finally we do
13 ask that while you pose your question that you pick up your handset if
14 using your speaker phone for sound quality purposes. Please hold
15 while we poll for questions. Our first question is coming
16 from Jordan Alliger of Goldman Sachs. Sir, please state your question.
17 Q. Hi, I guess one question is after this
18 transaction goes through, will you envision
19 additional possibilities for expansion or would
20 you view the network as largely complete from a
21 strategic standpoint?
22 A. Well, I think this pretty well covers
23 the country. American Freightways has all points
24 services and in all of the states that they serve
25 and Viking of course has the market leadership
26 position in the western states. I think there
27 are only two states that the two companies don't
28 serve directly. They serve it through an
29 affiliate service that's Montana and Wyoming. So
30 I don't know that there's much need for anything
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2 other than managing the businesses.
3 Q. Just a follow-up. Although it was
4 mentioned accretive, I don't know if you can give
5 any sense for the type of accretion you guys are
6 considering whether it be a range or what have
7 you and when the timing will come in? I guess it would
8 be contingent when the deal will close. Again
9 your thoughts on that.
10 A. Jordan, it's Alan. It probably will likely
11 not be material accretion in fiscal 01 if we go according
12 to the calendar January and February consolidated
13 with a minority interest and then we'll have the
14 fourth quarter where we'll have the full
15 consolidation but thereafter I would expect the
16 accretion to be in the 3 to 5 percent range.
17 Q. Thank you.
18 ANGELO: Thank you. Our next question
19 is coming from Doug Rockel of ING Barings
20 Bergs. State your questions.
21 Q. Thank you. Federal is regarded as an airline
22 when it comes to labor negotiations and most trucking
23 companies are governed under the National Labor Relations Act (NLRA).
24 What effects will this transaction have in terms of your labor status?
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2 A. This is Fred Smith speaking. FedEx
3 Corporation owns five major operating units
4 including FedEx Ground, FedEx Custom Critical and
5 FedEx Express. The new freight unit and FedEx
6 Ground are governed by the National Labor
7 Relations Act. FedEx Express is an integrated
8 air-ground express company, and an air carrier is
9 regulated by the Railway Labor Act. Nothing
10 in this transaction should affect those issues.
11 The companies are managed independently. The
12 corporation through its services subsidiary
13 provides information and telecommunications
14 services and certain major corporate sales
15 activities, but the companies operate
16 independently reporting in to our strategic
17 management committee and our executive
18 committee. That's how we "compete collectively
19 but operate independently" strategy, and we think
20 it's a terrific strategy.
21 ANGELO: Thank you. Our next question
22 is coming from Gary Yablon of Credit Suisse First
23 Boston. Please state your question.
24 Q. I just wanted to know if you could
25 talk strategically about the opportunities for
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2 the much expanded ground product to work with, --
3 maybe not necessarily integrate -- but work with
4 the air product and move more product on the
5 ground over time or things of that nature; is
6 there something about this where there's some
7 efficiency on that score going forward?
8 A. Gary, this is Fred Smith speaking. A
9 big part of the operate independently-compete collectively
10 strategy is a fundamental recognition that there
11 are distinct market segments in the transport and
12 logistics business. I feel very strongly after,
13 you know, almost three decades in this business
14 that if you try to serve too many market segments
15 with the same operating unit you sub-optimize
16 either service levels or you increase your
17 costs.
18 The requirement to move freight,
19 palletized freight, more and more on a regional
20 or an interregional basis is a distinct market
21 segment. The express business requires a
22 different set of operating disciplines and assets
23 and so forth. Now our express company also
24 carries freight, but it carries freight that goes
25 in generally trucks and planes going long
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2 distances, including internationally. That's not
3 the case with our LTL companies and so I think
4 the overlap will be small.
5 Now having said that, I think that
6 there are tremendous opportunities to cross-sell
7 a portfolio of services to our customers. And
8 there are significant opportunities but it
9 is mostly on the revenue side and not on any sort
10 of operational synergies.
11 There will be opportunities for Viking
12 and American to generate new business between the
13 two companies. That I'm sure of.
14 Q. Okay, thank you.
15 ANGELO: Thank you. Our next question
16 is coming from Jon Jacobson of Highfield
17 Capital. Sir, please state your question or
18 comment.
19 Q. Hi, good morning. Have the Garrisons
20 indicated whether or not they are going to tender
21 their shares into the tender offer and if so or
22 not what happens if less than 50 percent of the
23 shares are tendered into the tender offer, then
24 what happens?
25 A. We have a voting agreement with the
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2 Garrisons that allows them to tender up to 1
3 million shares into the tender offer at their
4 discretion. An additional 2.2 million shares if
5 we do not reach the 50.1. FedEx Corporation also
6 has the right to extend or waive the 50.1 percent
7 requirement if it's not met. However we
8 anticipate that not being an issue.
9 Q. Thank you.
10 ANGELO: Thank you. Our next question
11 is coming from Helane Baker of Buckingham Research.
12 Q. Thank you very much operator. Just a
13 question about American Freightways and FedEx
14 now. How much of the freight that AF carries is
15 already FedEx freight?
16 A. I would say a de minimis amount.
17 Q. Okay, so then the opportunity to move
18 freight off of owner operators your other
19 independents to move on to AF should improve
20 the margins on a going forward basis, I would
21 think?
22 A. Certainly, Helane, we're going to
23 explore every possibility. However the number I
24 gave you on accretion of 3 to 5 percent is
25 dependent on no synergies. To the extent that we
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2 can find things to keep it in the family
3 absolutely we will do so. But as Fred said, this
4 is much more of a portfolio broadening play where
5 we anticipate that we will also generate
6 additional packages for our Express and Ground
7 networks by being able to offer a much broader
8 LTL service.
9 Q. Okay. Okay. That seems to make
10 sense. So in terms of -- will then -- will their
11 volume start to go through your system? Is that
12 what you're saying?
13 A. No.
14 Q. Okay.
15 A. Absolutely not. But on a broadened
16 portfolio selling basis, we now no longer have an
17 artificial 150 pound restriction for ground
18 movement.
19 Q. Oh, okay.
20 A. We only had it on the West Coast. We
21 now added the rest of the United States and I can
22 tell you that has been very powerful at Viking where we
23 have been able to cross-sell and generate package
24 volume as a result of being able to have that LTL service in
25 the west and we anticipate we will expand
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2 that nationwide just as fast as we possibly can.
3 Q. Two other brief questions. Does their
4 customer base in any way overlap your customer
5 base?
6 A. I think to a small degree. But
7 remember at Express that freight business at
8 Express is time definite. Whether it be F1, F2,
9 F3. In the case of F1 you know it's ten times
10 the revenue per pound because is basically moved
11 overnight, point to point, it's required to be
12 palletized, it has weight limits on it so it is
13 for a very specific, very high end part of the
14 market. There may be some overlap with FedEx
15 Express' F3 traffic but again I don't think that
16 to be very great and I actually believe that by
17 being able to offer now nationwide LTL service we
18 will actually generate more express freight for
19 FedEx Express as the opportunity has now been
20 able to be sold by the American Freightways' team.
21 Q. Okay. Then my last question is, does
22 this in any way take away from your negotiations
23 with the postal service?
24 A. All I will say about the postal service is
25 that we continue to hold discussions with them.
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2 Q. Okay, all right, well, congratulations on
3 what looks like an interesting transaction.
4 Thanks, Alan.
5 ANGELO: Thank you. Our next question
6 is coming from Tom Alback of BB&T Capital
7 Markets. Please state your question or comment.
8 Q. Thank you. You know in terms of the
9 cross selling opportunities, do you have a
10 timetable at which the sales force will begin to
11 be crossed or trained in selling American
12 Freightways' capabilities? I mean as we look
13 back at what happened with the old RPS and now
14 FedEx Ground there's about a two and a half year
15 lag between when you acquired the companies and really
16 began to focus on the cross-selling.
17 A. We intend to move very rapidly into
18 this. I believe that in this particular instance
19 the training will not have to be nearly as
20 intense because the entire FedEx services sales
21 force is already selling freight. This just
22 gives them another arrow in the quiver, if you
23 will, to be able to offer a more day-definite
24 ground service lower cost but highly reliable movement.
25 Fred, you want to add to that?
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2 MR. SMITH: Well, I was going to say
3 Viking and American Freightways will continue to
4 maintain their own sales force and our services
5 company sales force that sells both Express and
6 Ground will be able to refer companies
7 who need this type of outstanding regional LTL
8 service to our LTL freight specialist in American
9 or Viking.
10 I think there is probably more
11 opportunity in the short and intermediate term
12 and by that I mean in the next couple of years to
13 cross-sell at the large company level, where we
14 will probably have a single account
15 representative at the very largest companies.
16 But I want to emphasize that American and Viking
17 and our LTL unit will maintain their sales forces
18 separately.
19 Q. Okay. So then at some point would
20 American Freightways salespeople be cross-trained
21 to sell the other FedEx products I guess would be
22 a good question?
23 A. I think the way that it's best put is
24 that the Express and Ground package sales force
25 will be able to refer our customers who require
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2 regional LTL service to the freight specialist
3 and vice versa.
4 The selling of LTL is a highly
5 specialized business. The business has a lot of
6 peculiarities and esoteric aspects to it, and we do
7 not intend to have a single sales force selling
8 both Ground and Express and LTL. They will be
9 able to refer as sister companies an
10 account that needs both services.
11 Now, for the very largest accounts we
12 probably will have a single representative for
13 FedEx Corporation dealing with that company. But
14 he or she can then avail themselves of Express or
15 Ground or LTL freight specialists to be able to
16 serve that account's needs. Have I been clear?
17 Q. Yeah. Somewhat. I guess as a
18 follow-up on the F1, F2, F3 you talked about the
19 time definite nature there, but it would seem that
20 that would be one opportunity that would avail
21 itself to put some of that freight into the
22 American Freightways system. I don't think I
23 heard you exactly talk about that opportunity.
24 You talked more about the differences. But am I
25 incorrect in making that assumption that some of
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2 that freight couldn't go to the American
3 Freightways system?
4 A. Yes, you're incorrect in that
5 assumption. The F1 product that FedEx Express
6 serves in the main is a long distance movement
7 which requires transportation by air to get it to
8 its destination within the committed time frame.
9 Now there is a very small amount of that where
10 there is an overlap. However, the Express pickup
11 cycle is generally very late in the evening or
12 relatively late depending on what part of the
13 country you're in, and early morning deliveries.
14 And that is not the same pickup and delivery
15 cycle as the LTL business and obviously it is
16 impossible to move a freight shipment from San
17 Jose, California to Charlotte, North Carolina
18 overnight in a truck. So there is very, very
19 little overlap in the F1 sector.
20 There may be a bit more in the F2 and
21 as Alan mentioned in the F3. However, again, I
22 want to caution you that the freight segments are
23 distinct. The express freight shipper has a
24 distinct set of requirements and the regional LTL
25 shipper has a distinct set of requirements and
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2 there is relatively small overlap there.
3 We have experienced this with Viking
4 for the last almost three years now. We've seen
5 very little overlap. I should tell you that
6 American Freightways does about 46,000 shipments
7 a day, Viking's at about 13,500 and FedEx Express
8 is at about 10,000. That should give you an
9 order of magnitude of the relative size of these
10 things, and again as Fred says, because of the
11 later pickups, earlier deliveries and time
12 definition of express, those yields are
13 substantially higher than at Viking or American
14 Freightways and the market there is probably
15 since it's limited to the high end not nearly as
16 big.
17 Q. Thank you.
18 ANGELO: Thank you. Our next question
19 is coming from Jeff Kauffman of Merrill Lynch.
20 Sir, please state your question or comment.
21 Q. Okay, thank you very much. Just a
22 quick note to Sheridan, Tom, Fred, Alan.
23 Congratulations to all your respective
24 organizations. This appears to be a very solid
25 fit across the board here.
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2 Kind of the same question for both
3 companies here.
4 First to FedEx. Obviously, the
5 experiment at Viking went very well. The results
6 were better than I think you'd expected when you
7 started out and we decided we like that
8 business.
9 Can you talk about some of the factors
10 that have strategically driven you to decide to
11 make LTL a bigger part of the FedEx portfolio?
12 And I guess following up on that a similar
13 question to Tom or Sheridan would be now that you
14 have this big financial powerhouse of FedEx and
15 this fantastic brand name backing your product
16 that was already good, what strategically do you
17 see changing for the carrier going forward?
18 A. This is Alan. I'll start out. I mean
19 obviously the broadening of the portfolio and
20 being the only company who offers this we think
21 is a huge opportunity. Doug Duncan who is here
22 and can take us a little bit further than me has
23 done a fabulous job at Viking and we have been
24 listening to our customers out there who have
25 been telling us, look, we need you to take
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2 packages and shipments that weigh more than 150
3 pounds and we need inside deliveries, we need
4 tracking and tracing, we need all the bells and
5 whistles that we get from your express package business.
6 Doug has been providing this. And he's been
7 improving the service, improving the number of
8 scans in information availability while he's been
9 improving the operating ratios. That's what got
10 us really excited about it. As we talk to more and
11 more customers who operate in all parts of the
12 country and they said, gee, we'd really like you to do this east of
13 the Rockies, you do a great job for us west of the Rockies
14 but we're forced to use other carriers elsewhere and as we looked
15 we began to study all the opportunities very carefully. We fell in
16 love with American Freightways. It's obviously a
17 natural perfect geographic fit. The cultures
18 are exactly a perfect fit and I think Sheridan can
19 elaborate on that. We pass it over to Doug just
20 to give you a little bit what he's experienced on
21 the West Coast for the last couple of years.
22 MR. DUNCAN: I think the freight
23 market, the LTL freight market, has really grown
24 rapidly speed requirements to the customer.
25 I think that refers to the change in inventory
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2 requirements and the speeding up of the supply
3 chain, so regional transportation is growing
4 rapidly in the freight market and I think that is
5 a part of the business that we need to be in.
6 We've done it in the west and American
7 Freightways has done it in the other parts of
8 the country and that will continue to be our
9 focus on the regional, next and second day
10 transportation to meet the growing supply chain need.
11 Doug, if I interpreted Alan's comments
12 correctly this isn't just FedEx getting involved in the
13 LTL business. This is raising the bar in that
14 business. You're talking about raising yields,
15 raising technology. This isn't just being a
16 trucking company?
17 A. Well, I think AF -- the combination of
18 AF and Viking is a combination of the two best
19 service companies in this business.
20 Q. Uh-hum.
21 A. And it's now going to be affiliated
22 with FedEx and we will begin to integrate those.
23 We offer customer solutions all through the
24 supply chain.
25 Q. Can I get a quick response from
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2 Sheridan or Tom just on whether or not you see
3 this kind of changing the core strategy that you
4 have embarked on in the last few years?
5 A. This is Sheridan, I'm sorry, I don't
6 think this will change the core strategy. In a
7 sense all along we made this a central serving
8 point or benefit to the customer that we serve
9 all points direct. What this does for us,
10 though, when we're out in the boonies -- which
11 we promise to do -- we are out in the boonies
12 we're able to offer a particular customer a
13 broader service array in terms of all points to
14 48 states in combination with Viking. So we
15 will have something there which we
16 never had before, go to a company to serve those
17 48 states. This will work great for us.
18 We operate in this fashion. We give
19 service on intrastate, regional, interregional
20 and long hall or national -- this simply allows us to
21 fill that basic service out. It's not really a
22 change. Just an addition to what we can do.
23 Jeff, let me just add one thing. It's
24 obviously our intention to use the great technology
25 that we already have at FedEx Express and FedEx Ground
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1
2 and exploit what we've already developed
3 with our LTL group and over time you're going to
4 see a lot more information intensity about LTL
5 movements, you're going to see capabilities over
6 time about SKU levels in those shipments when
7 they arrive, much better inventory management.
8 So absolutely we're going to take the lead that
9 we have and expand it from an IT standpoint.
10 Q. Very well. Well, thank you all and
11 best of luck.
12 ANGELO: Our next question is coming
13 from James Valentine of Morgan Stanley Dean Witter.
14 Q. The only question I have is with
15 regional LTL carriers that can't cover an entire
16 country, they tend to have very strong
17 relationships with one or two partners in those geographic
18 regions they don't reach. Can you tell us, was
19 Viking and American Freightways, were they already
20 the number one and number two partner in the
21 other's respective regions and if not can you maybe
22 tell us who the one or two were?
23 A. I can tell you -- this is
24 Sheridan -- from our standpoint and of course we
25 did very, very little business with Viking, we
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1
2 have a policy of not doing interline business in
3 the domestic country, the United States, so that
4 we would have almost no exchange of traffic at
5 this time with Viking. But then, actually, it will
6 change substantially.
7 MR. DUNCAN: This is Doug Duncan. We
8 did have a relationship with Overnite
9 Transportation in the eastern part of the country
10 to serve those customers that wanted to use us as
11 a single source and of course that business as
12 the transaction becomes complete will come over
13 to American and I feel certain we will be able to
14 expand that.
15 Q. Do you have any idea, a ballpark
16 range, in size, $200 million, $500 million?
17 A. I really don't have that with me.
18 Q. Okay. Thanks.
19 ANGELO: Thank you. Our next question
20 is coming from Edward Wolfe of Bear Stearns.
21 Q. Yeah, good morning, guys. Alan before
22 somebody asked the question about tender you know
23 what happens if you don't get the required tender
24 numbers you said, I just want some clarification,
25 that the Garrisons have agreed to sell a million
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1
2 shares at their discretion into the tender and
3 then you said if you don't get the 50 percent
4 then they can do up to 2.2. Is it at the
5 Garrisons' discretion at that point or does that
6 become mandatory?
7 A. I'll go there again, Ed. The
8 Garrisons have at their discretion the right to
9 tender up to a million shares in the cash
10 tender. They also have the right at their
11 discretion to tender an additional 2.2 million
12 shares should we not achieve the 50.1 percent by
13 mid December.
14 Q. So it's at the Garrisons' discretion?
15 A. That second piece is at our option.
16 Q. At FedEx?
17 A. Yes, sir.
18 Q. Are there any other breakup fees or
19 anything like that?
20 A. There is a breakup fee.
21 Q. Do you care to elaborate on that?
22 Ballpark? And is it for both companies, the
23 breakup?
24 A. That's a one way breakup fee for the FedEx
25 Corporation of about $33 million.
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1
2 Q. Okay. I'm looking at what you have on
3 the website which looks a lot like the electoral
4 votes with the election campaign. The red and
5 blue where American Freightways is and where Viking is,
6 where areas are served, where areas are not served and it's obviously
7 a very good end-to-end merger. That being said there are some
8 states where you overlap. There are some states
9 where neither of you are now. What's the plan
10 going forward in terms of branding in terms if
11 you're not going to integrate the two businesses
12 and where?
13 A. This is Doug Duncan. I would like to
14 respond to that. A couple of things, number one
15 the brands will continue, we're blessed with
16 three very, very strong brand names here with
17 American and its market, Viking and all now under
18 FedEx which I think we can make that an extremely
19 positive combination. We do have some areas
20 where we overlap and we will take the time to
21 figure that out and figure out what's best to
22 serve the customers in those markets, but the
23 nice thing is we've got the luxury of time, both
24 of the companies are extremely successful in what
25 they're doing today and we can take our time to
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1
2 work those issues properly. The two blank states
3 up in the upper Midwest we have to address pretty
4 quickly and I think we'll want to cover the rest
5 of that map with either blue or red.
6 MR. GRAF: This is Alan. Much like we did with the
7 Caliber acquisition we're certainly going to do a significant amount
8 of market research over time on these branding issues and Doug
9 said there's no need to do that at the moment. We're very
10 happy with how this is going to work. We know that
11 the customer is going to understand that there is a FedEx behind the
12 Vikings and AFs brand and we're very comfortable with that going forward
13 in the near term.
14 Q. Is it fair to say though American
15 Freightways will not grow geographically into the
16 western states where Viking is and Viking is not
17 going to grow itself into American Freightways. The
18 way they have been sort of heading over the last
19 several months or years?
20 A. I think that's one of the real
21 advantages here. There's no need for American
22 now to expand westward. We have great coverage
23 in the west already and we will simply take the
24 time to work on the information systems and
25 operating procedures for these two companies to
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1
2 work together and they'll have immediate coverage
3 in the west for their customers.
4 Q. Alan, just one last one. In terms of
5 cost savings, is there anything obvious like
6 shutting down one of the corporate headquarters
7 or anything like that that you see in the near
8 term?
9 A. I think the most obvious things are we
10 had Viking and we have American Freightways
11 competing for the same properties in the west.
12 So we're going to see a significant reduction in
13 the combined entities' capital budgets which I
14 think is a home run. With the strength and
15 power of FedEx Corporation's IT capabilities we
16 will not have to do things that American was
17 getting prepared to do immediately such as backup
18 data center, et cetera, et cetera. I think we
19 can give American all the previous research that
20 we've done on scanning techniques and information
21 to the customer. Obviously you think about
22 fedex.com and its uses there. So they are
23 everywhere but we don't have any intention to
24 shut down any of the headquarters. I think over
25 time we will simply be able to grow much faster
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1
2 with the same level of overhead that we have
3 right now.
4 Q. Okay, thanks a lot. Appreciate it.
5 ANGELO: Thank you, Mr. Wolfe. Our
6 next question is coming from Dan Serita of
7 Reuters. Sir, state your question or comment.
8 Q. Just a follow up of the areas where
9 you overlapped. First of all do you see
10 any -- are you suggesting that eventually the
11 brand that's stronger will be the one that
12 survives, the one that won't will be shut down?
13 A. I don't have any preconceived notions
14 at this point. I mean one of the outcomes could
15 be we stay as is. But we're going to do a
16 thorough amount of research, talk to our
17 customers and we're going to be guided by that.
18 Q. If you wouldn't mind repeating the
19 date when you believe you'll see the 3 to 5
20 percent accretion?
21 A. As I said earlier, we will have some
22 accretion in fiscal 2001 for FedEx Corporation
23 but it won't be material and we believe in
24 fiscal 2002 and beyond it's going to be in the 3
25 to 5 percent range.
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1
2 Q. Thank you.
3 ANGELO: Thank you. Our next question
4 is coming from Peter Coleman of Bank of America
5 Securities.
6 Q. Good morning, gentlemen. Just a
7 couple quick questions. If you could spend a
8 little more time on why you wouldn't go ahead and
9 integrate fully with Viking. Obviously, it
10 does seem there could be considerable synergies
11 if you actually did combine the two. And then comment, you
12 talked about the overlap, or the lack thereof
13 between the F1, F2 and F3 prongs. And I guess what I'm
14 curious about is what you do in the case of
15 overlap on the ground parcel or RPS side because
16 I think we've increasingly seen over time that
17 there's more of that sort of gray area freight for
18 what a parcel company would be interested in and
19 what a LTL company would be interested in. If
20 you look historically at the Roadway situation,
21 Roadway actually got into a situation where senior
22 management said, hey, you guys, you can't play in
23 this arena at all so I'm wondering how you plan
24 on dealing with those types of disputes.
25 MR. SMITH: This is Fred Smith
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1
2 speaking. First of all, I think the historical
3 issues of Roadway, the national LTL carrier and
4 RPS have very little to do with the current state
5 of affairs. Roadway was a historical former
6 regulated national LTL carrier whose network was
7 set up to maximize load factors and national
8 coverage. Both Viking and American are regional
9 LTL carriers who are set up to maximize service
10 levels and to focus on the ability to move
11 traffic overnight within a region and on a
12 two-day basis on an inter-regional basis.
13 That is increasingly the way distributions of
14 heavier items are done in this country, regional
15 distribution centers say in the Northeast, the
16 Midwest, Southwest, Southeast, the West and then
17 overnight or two-day service.
18 So Viking and American are focused on
19 those regional markets and that is why it is so
20 important to not put them together. It is
21 important for them to have the focus on the
22 regions where they are successful. So we will
23 regardless of what happens with branding or
24 anything else we will maintain a separate
25 regional operation in the West and a separate
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1
2 regional operation in the East as part of our LTL
3 freight group. We are very, very confident that
4 that is the best way to grow and serve the
5 customers for this time-definite business.
6 Now, to your question about the
7 overlap between Express and Ground. The Express
8 company is increasingly focused on longer
9 distance movements of time certain shipments
10 including time certain shipments any place in the
11 world. The FedEx Ground system is focused on day
12 specific deliveries of items that can be moved
13 totally by truck. And while there is some
14 overlap there or there has been historically, I
15 have to tell you being in the business for so
16 many years, the differences are much greater than
17 any similarities.
18 The express marketplace generally
19 requires later pickups, its time-certain
20 deliveries, not day-certain deliveries. It
21 requires a very sophisticated choreography
22 between trucks and planes, connecting 150 major
23 airports and almost 300 smaller airports
24 together. It's a different operational
25 discipline required to run our express company
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39
1
2 than to run either a ground package system or a
3 regional LTL network. So I don't think any
4 historical situations hold any lessons for the
5 future, and I think our portfolio of networks:
6 ground, express and now freight, are optimized for
7 today's supply chain requirements in this very
8 fast pace economy that we are serving.
9 Q. Okay, so you see just back looking at
10 your ground parcel business and the LTL business,
11 you see relatively little overlap between those
12 two. I'm very clear on the express product. I
13 guess it's the ground parcel and the LTL that I
14 was sort of curious about, what the overlap might
15 be there?
16 A. Well, I think the overlap's pretty
17 small because, you know, to the untrained eye
18 perhaps I mean you see two trucks going down the
19 road and they say American Freightways on it you
20 see two trucks going down the road and it says
21 FedEx Ground, two trucks, 28 foot twin trailers
22 and you say, well, gee, there's got to be some
23 overlap there. Well, there's really not. Just
24 for starters the twin trailers that are being
25 moved for FedEx Ground are in the main drop-frame
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1
2 trailers which are optimized for cubic
3 utilization of stacking packages. The terminals
4 for FedEx Ground are laid out in an entirely
5 different manner than the terminals for moving
6 palletized items in the LTL sector. If you
7 notice the LTL trucks are not drop-frames, they
8 are regular dry van 28 foot pups which are
9 optimized for moving forklifts and standard
10 wooden pallets in and out of the trailers. The
11 trailers are all dock height to facilitate
12 that. So while there appear to be great
13 synergies they are very distinct market
14 segments.
15 What the customer wants is one stop
16 shopping from FedEx Corporation. That is what we
17 found out after the Caliber acquisition and
18 having the good fortune to have the wonderful Viking
19 franchise. We had many customers that would
20 rather want us to move pallets of shrink wrap
21 packages across a region into the West than break
22 those pallets down and give them to FedEx Ground
23 to deliver. There are lots of synergies on the
24 revenue side. But there are not many synergies
25 on the operational sides because they are
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41
1
2 distinct market segments in terms of the physical
3 properties and the operational disciplines
4 necessary to serve those markets. So I want to
5 emphasize again that FedEx Express, FedEx
6 Ground and now the FedEx LTL group will operate
7 distinct and independent networks optimized to
8 their market segments.
9 Q. Okay, thanks. I will turn it over to
10 somebody else.
11 ANGELO: Thank you. Our next question
12 is coming from Susanne Lent of Alliance Capital.
13 Q. Hi. Just a couple of questions.
14 First, can you give us the goodwill number?
15 A. We certainly don't have that quite
16 finalized yet, but it's in the $600 million range.
17 Q. And you said over 40 years?
18 A. Yes.
19 Q. And then could you just elaborate a
20 little bit more on the revenue synergies that you
21 hope to get? I was hoping for some sort of
22 quantification if the underlying market is
23 growing I think you said at 10 percent. Do you
24 think you can surpass that market by how many
25 basis points? Just a little bit more clarity on
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1
2 the actual size of revenue synergies you hope to
3 get.
4 A. Well, I think I encapsulated that with
5 my earlier comment about accretion, but we absolutely
6 intend to outgrow the market.
7 ANGELO: Our next question is coming
8 from Greg Burns of Lazard.
9 Q. Most of my questions have been
10 answered, but just one on the IT integration. I
11 guess my question is -- this would be either for
12 the FedEx people or the American Freightways
13 people -- what do you see as the challenges, if
14 any, to integrate the IT and then assuming that
15 will take some period of time, and perhaps before
16 that IT is integrated you're going to have Viking
17 shippers shipping stuff to the East Coast and
18 vice versa how are you going to transition the
19 integration of IT, and what are the issues there,
20 if any?
21 A. This is Doug Duncan and, for certain,
22 information about the shipment is vitally
23 important to customers and growing so every day.
24 So that will be one of the early things that we
25 work on to make sure that we have the information
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1
2 integration between the two systems as well as
3 using the right technology so it integrates with
4 the other FedEx companies. That's very
5 high on my priorities list.
6 MR. SMITH: This is Fred Smith
7 speaking. I would just add to that in studying
8 these industries it was very clear to me that
9 American Freightways was technologically on the
10 leading edge in their industry. They are just
11 first class in every respect. And while we have
12 as a corporation the ability to maximize
13 synergies in the IT area for instance lower
14 telecommunications cost, as Alan said we will be
15 able to lower the cost of American Freightways
16 providing backup, computer power and so forth.
17 There will still be IT units inside our LTL
18 operating companies to permit the continued focus
19 and leadership position in the LTL area. So I
20 don't want to leave any impression that we're
21 going to take the IT people in Viking and
22 American Freightways and put them into FedEx
23 Services. There will be some complimentary
24 activities between the two. But again they will
25 be maintained separately.
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1
2 I should add, in that regard, that Fedex
3 Ground similarly retains an IT department which
4 reports to the CEO of FedEx Ground, Dan Sullivan, and it
5 works in a harmonious way. And the CIO of FedEx Ground who
6 reports to Dan also reports to the CIO of FedEx Coporation,
7 and we found that is the best way to get the best
8 of both worlds.
9 Q. One more follow up. Alan, it sounds like you
10 think there could be some IT savings synergies but that
11 you haven't calculated them in your guidance on
12 accretion, is that right? There probably are in
13 fact some savings on the IT but you haven't
14 assumed them in those numbers?
15 A. That's correct. I think we'll get in
16 there and we'll find all sorts of strategic
17 sourcing opportunities across the equipment
18 communications and hook up charges et cetera, et cetera.
19 We know a lot of them are there, and we're obviously
20 going after them very aggressively. But they are not
21 included in my accretion numbers.
22 MR. CLIPPARD: Angelo? This is
23 Mr. Clippard speaking. Will you maybe take one
24 or two more questions and then we'll call it a
25 day.
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1
2 ANGELO: We'll take two more. Our
3 next question is coming from Satish Jindel of SJ
4 Consulting.
5 Q. Gentlemen, clearly for FedEx I think
6 you couldn't have picked a better LTL carrier than
7 American. I'm very happy to see the combination
8 of the two. The three part question I have is
9 all related to what you do going forward with
10 these businesses. One is with respect on the LTL
11 side, just like the other businesses you've got a global
12 presence, how you intend to expand this LTL
13 offering on an international and a global scale.
14 Secondly in terms of pricing, you have been very
15 successful with the FedEx freight and the way you
16 have handled that market. The LTL pricing
17 continues to be a very complex system involving
18 master freight classification and all that.
19 Do you expect to bring about changes
20 in that, that will influence the entire industry?
21 And third, with the Freightways going
22 up to two days with 1600 miles reaching service
23 levels that you do not find in the parcel
24 business via ground service do you expect to see
25 those capabilities being transferred over into
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1
2 the ground parcel side?
3 A. Well, this is Fred Smith speaking.
4 Satish, number one, you just rattled off a lot of
5 the particular pecularities of the LTL business
6 in terms of the historical rating and so forth.
7 That's exactly why I said that we will continue
8 to maintain a separate LTL sales force and that
9 the synergies will be mostly on the revenue side,
10 and only at the very largest companies where we
11 have a single sales executive representing FedEx
12 Corporation and the Express and Ground sales
13 force will call in the LTL freight specialist on
14 an as needed basis and vice versa. So we don't
15 think that we can unilaterally change decades of
16 historical practice of pricing and commodity
17 classifications and so forth.
18 Having said that, American Freightways
19 and Viking both have been very innovative and
20 leaders in terms of pricing schemes and options
21 and so forth and I think you can anticipate that
22 that will continue.
23 In terms of the synergies between
24 freight and ground, as I said a few minutes ago,
25 I do not see those cross-operating synergies. I
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1
2 think attempts to try to force those types of
3 operational synergies are counter-productive.
4 They are different types of hubs, they are
5 different types of vehicles. They are different
6 operating windows in terms of pickup and
7 delivery. That's even more so for the express
8 business.
9 I think the option -- the
10 opportunities for synergies are mainly between
11 Viking and American in terms of new revenue
12 opportunities and then from the LTL group
13 cross-selling our ground and express and vice
14 versa.
15 So hopefully that answers all your
16 questions.
17 Let me just add, we have built a very
18 sophisticated pricing organization at FedEx
19 Services that understands the bundle and we will
20 be able to price the bundle at corporate where we
21 have customers who are availing themselves in all of
22 our portfolio. Which I think will be a very
23 important factor in the total bottom line of
24 FedEx Corporation improving going forward. And
25 we had been working very diligently on this. We
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1
2 have put a lot of resources into it. I can tell
3 you they are very sophisticated. We know the
4 profitability by product, by customer and we're
5 going to be taking a huge advantage of that now with
6 the acquisition of American Freightways.
7 Q. If I can just comment on that. You're
8 going to take this bundling approach that you
9 have been able to employ with the Express and
10 Ground to the next level of integrating the LTL
11 shipments into it?
12 A. Absolutely.
13 Q. Some thing you don't have at the
14 present time?
15 A. Absolutely right, Satish. As far as
16 international goes there is no reason in the
17 world why we can't have, over time, our
18 international freight interfacing with our ground
19 LTL units now in the U.S. Absolutely it could make a
20 lot of sense.
21 Q. Great move. Thank you gentlemen.
22 ANGELO: Thank you
23 Mr. Satish Jindel. Our final question is from
24 Donald Button of A.G. Edwards.
25 Q. Congratulations to all of you.
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1
2 To Sheridan and Tom especially, you guys have come
3 a long way with the days of adding all point
4 service to the State of Illinois was your big
5 announcement.
6 Most of my questions have been asked
7 and answered, but the remaining question I have is
8 directed to the Garrisons. Can you refresh our
9 memory what percentage of the freight you are
10 currently moving is already next day service and
11 what percentages is second day service?
12 A. We're running about, let's see, 40 and
13 50 -- we're running about 40 percent next day and
14 55, 56 percent second day and 44 percent third
15 day.
16 Q. And how does this change the complexion
17 of this acquisition, change the complexion of the
18 marketing of your American Flyer service?
19 A. I don't think it will change it at all
20 I think it is just build on it. I don't think there
will be anything negative, I think it will be a positive.
21 Q. Good. Well, good luck, gentlemen.
22 A. One more comment. This is Fred Smith
23 I want to amplify what Alan said and Satish Jindel
24 asked a few moments ago. American Freightways
25 and Viking both currently have offshore
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1
2 services. Viking serves Hawaii, it serves, via
3 sea, Alaska, it has arrangements to move traffic
4 into Canada and into Mexico. American
5 Freightways has good service down to Puerto Rico
6 and to Mexico and into Latin American. And where
7 we're particularly anxious to see our portfolio
8 expand around the LTL group is to be able to move
9 freight shipments via low cost international
10 service transported movements. Obviously our
11 express company does a great job of moving door
12 to door real time sensitive freight, all
13 packages, all documents and this will give us a
14 new dimension over time and we intend to exploit
15 that.
16 MR. CLIPPARD: I think that wraps up
17 the call. I want to express our appreciation to
18 everyone that was on the call today. Thank you
19 very much for your very good questions and again,
20 thanks. We'll see you at our conference call in
21 December.
22 ANGELO: Thank you, ladies and
23 gentlemen, that does conclude today's
24 teleconference. You may disconnect your lines at
25 this time and have a wonderful day. If you
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51
1
2 joined the call late you can access a replay of
3 the call by dialing (888) 888-9543. The replay
4 will be available for one week. Once again we
5 thank you for your participation and have a great
6 day.
7
Elisa Dreier Reporting Corp. (212) 557-5558
780 Third Avenue, New York, NY 10017
Certain statements contained in this press release are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, such as statements relating to management's views with respect to
future events and financial performance and the proposed FedEx acquisition of
AF. Such forward-looking statements are subject to risks, uncertainties and
other factors, which could cause actual results to differ materially from
historical experience or from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, economic and competitive conditions in the markets where FedEx
operates, matching capacity to volume levels and other uncertainties detailed
from time to time in press releases and filings with the SEC by FedEx and its
subsidiaries.
ALL AF STOCKHOLDERS SHOULD READ THE TENDER OFFER STATEMENT CONCERNING THE
TENDER OFFER FOR SHARES OF AF COMMON STOCK THAT WILL BE FILED BY FEDEX
CORPORATION WITH THE SEC AND MAILED TO AF STOCKHOLDERS. THE TENDER OFFER
STATEMENT (INCLUDING THE OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND
OTHER OFFER DOCUMENTS) WILL CONTAIN IMPORTANT INFORMATION THAT AF STOCKHOLDERS
SHOULD READ CAREFULLY BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR
SHARES. AF stockholders will be able to obtain the tender offer statement, as
well as other filings containing information about FedEx Corporation and AF,
without charge, at the SEC's Internet site (http://www.sec.gov). In addition,
copies of the tender offer statement and other documents filed with the SEC by
FedEx Corporation may be obtained for free from FedEx by directing a request to
FedEx Corporation, 942 S. Shady Grove Road, Memphis, Tennessee 38120,
Attention: Investor Relations, telephone: (901) 818-7200.
ALL AF STOCKHOLDERS SHOULD READ THE PROXY STATEMENT/ PROSPECTUS CONCERNING THE
MERGER AND RELATED TRANSACTIONS THAT WILL BE FILED WITH THE SEC AND MAILED TO
AF STOCKHOLDERS. THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT
INFORMATION THAT AF STOCKHOLDERS SHOULD READ CAREFULLY BEFORE MAKING ANY
DECISION REGARDING
<PAGE>
THE MERGER AND RELATED TRANSACTIONS. AF stockholders will be able to obtain the
proxy statement/prospectus, as well as other filings containing information
about FedEx Corporation and AF without charge, at the SEC's Internet site
(http://www.sec.gov). In addition, the proxy statement/prospectus and other
documents filed with the SEC by AF may be obtained for free from American
Freightways Corporation, 2200 Forward Drive, Harrison, Arkansas 72601,
Attention: Investor Relations, telephone: (870) 741-9000.
FedEx and AF and their officers and directors may be deemed to be participating
in the solicitation of proxies from AF's stockholders with respect to the
merger and related transactions. Information regarding the officers and
directors of FedEx is included in the FedEx Proxy Statement for its 2000 Annual
Meeting of Stockholders filed with the SEC on August 14, 2000. Information
regarding the officers and directors of AF is included in the AF Proxy Statement
for its 2000 Annual Meeting of Stockholders filed with the SEC on March 11,
2000. These documents are available free of charge at the SEC's Internet site
(http://www.sec.gov) or by contacting FedEx or AF at the addresses set forth
above.
