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Filed by: EGL, Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and
deemed filed pursuant to Rules 14a-12 of
the Securities Exchange Act of 1934
Subject Company: Circle International Group, Inc.
File Number for Registration Statement on Form S-4: 333-42310
Eagle-Circle Merger
Questions and Answers
August 18, 2000
Over the past several weeks, there have been many questions from personnel
about the proposed merger of EGL, Inc. (Eagle) and Circle. As you might
imagine, at this early juncture there are many issues about the merger that are
under discussion. Integration teams are being formed and plans are being
considered.
While we don't have answers to every question, we have picked the most asked
questions, and provided responses to the level of detail we can at this point.
Many specific questions regarding benefits plans, personnel and compensation
policies, the future structure of the combined companies, how we will operate,
etc., will be answered as the merger moves to completion and formal integration
plans are finalized. We'll update you with more information as it becomes
available.
In the meantime, following is a Q&A with information and clarifications we're
able to provide at this point.
Who is on the integration team?
It will be a small group of senior managers from each company. The leader will
be Kim Wertheimer. There will also be sub-groups of other managers who will be
assigned to specific projects that come out of the overall integration plan. We
expect these plans and teams to be formalized soon.
Where will the company's corporate office be located?
The new combined company's corporate office will be located in Houston, Texas.
A transition plan will be communicated in the near future. Circle's San
Francisco headquarters office is expected to remain open at least through the
end of the year, to ensure effective transition.
What will happen to the employees at Circle's Corporate Office?
They are seen as essential to a smooth transition and necessary to help the
company complete the integration period. During the course of the integration,
some positions will be offered relocation to our corporate headquarters in
Houston.
Will the merger result in lay-offs? If so, how many?
One of the attractive aspects of this merger is the relatively limited
redundancy between the operations of the two companies. Our goal is to maintain
and grow the customer base of both companies - and to build additional business
by leveraging the complementary strengths of the two companies. Consequently,
we anticipate that there will be new and expanded opportunities for the
employees of both companies. Except for Circle's headquarters staff, we expect
to maintain as many employees as possible.
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What effect will this have on our benefits? How will you reconcile differences
between the two plans?
For the time being, EGL and Circle employees will maintain their current
benefits. As the integration proceeds, employee benefit issues will be
addressed by the integration team. Our goal will be to provide a
market-competitive benefits package that meets the needs of both Eagle and
Circle employees and their families. One of the positives of the merger is that
it will give the combined company more "critical mass" in terms of group
benefit plan choices and design.
Will the Eagle Quarterly Incentive Bonus Plan for 2000 change?
No, the quarterly bonus plan will remain intact through December 2000.
Will the Eagle Annual Profit Sharing Bonus for 2000 change?
No, the annual profit sharing bonus will remain intact for fiscal 1999-2000.
Does Circle have a quality program?
Yes, their quality management system is ISO 9002 certified in 33 of their USA
locations.
What impact will this have on Eagle's sales program?
The goal of the integration team is to look at every aspect of our business,
and develop plans and strategies intended to maximize the best of both
companies in a combined organization once the transaction is completed. Eagle
is known for its strong sales-focused culture. Circle has invested
significantly to improve its sales operations over the past two years. Eagle
has excellent domestic sales growth. Circle has international sales expertise.
The two are expected to be complementary and provide additional opportunities
for sales success. Sales plans in the post-merger environment are expected to
be supported with proper resources and focused on rapid growth of profitable
new business. There also is significant potential to cross-sell each company's
customer base. So, the opportunities for aggressive and rewarding sales careers
are anticipated to be bright in the combined company.
How will the management team change?
An integration team made up of equal numbers of managers from both companies is
being planned to address the overall issue of management structure as a
combined organization. As a merged organization, the intent is to deploy the
most appropriate and qualified resources to manage the combined company going
forward. The expanded service capabilities of the new combined company are
expected to provide new challenges and greater career opportunities.
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Who will be president of the combined company?
Upon successful completion of the merger, Jim Crane will remain as Chairman and
CEO of the combined companies. Peter Gibert is to become a member of the board
of directors of the combined company.
When will the acquisition be completed?
The process is underway to obtain the appropriate approvals, including the
approval of both Eagle and Circle shareholders. We currently expect the
transaction to be completed no later than October 2,2000.
How will this affect the industry?
This transaction is expected to create a combined organization that will be a
formidable competitor with industry-leading service capabilities. With the
industry continuing to consolidate, we believe customers want single-source
companies with a full global infrastructure, and a complete menu of domestic
and international logistics services. Increasingly, market trends indicate that
it will become more difficult for smaller companies to compete. Together, Eagle
and Circle are expected to be well positioned with a comprehensive package of
integrated domestic and global transportation services, logistics and supply
chain management and customs brokerage services. The two concerns bring
together a unique mixture of complementary strengths. As a combined company,
Eagle/Circle is expected to provide substantial competitive advantage
unavailable from other non-asset based forwarders.
What about an overlap in facilities?
One of the tasks of the integration team will be to evaluate our infrastructure
and determine where it makes sense to consolidate physical facilities. These
plans will need to be formalized, and at the appropriate time, communicated to
employees. Where it is the proper business decision to do so, facility
consolidations will be handled in an orderly manner.
What about overlap and integration of IT systems?
Again, the integration team is intended to have a sub-group of Eagle and Circle
employees charged with evaluating our systems and determining the necessary
steps to integrate our IT resources into a common platform. The goal of the
effort is to create, in the post-merger organization, a combination of systems
supporting efficient operations and superior resources to properly manage and
operate each segment of the business, maintain consistent quality service for
customers, and provide employees with effective technology tools to perform in
their jobs.
It is anticipated that Eagle's systems will become the principal platform. It
is also anticipated that the post-merger company may utilize some current
Circle operating systems. As the details of the systems integration plan are
worked out, these will be communicated to employees.
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Overall, the opportunity to combine the improved IT resources from Circle's
initiatives with EGL's proven platform will position the merged organization
with a single global IT system. It is expected to represent a competitive
advantage, particularly in the international arena.
What systems will be used for ocean and brokerage, and what for air operations?
What about warehousing, logistics and inventory management?
The systems integration team is being charged with making that evaluation and
recommending the best course of action. Again, the intended goal is to provide
systems in the combined company that are flexible and expandable, help our
employees deliver the highest quality product possible, and respond effectively
to our customers' needs for timely, accurate and thorough information. It may
be that some applications running today at Circle, such as the customs
brokerage operating system, prove to be more appropriate for the merged
organization. In a case such as this, the Circle application would be the
operating system of choice in the combined company.
Importantly, where we have made a commitment to a customer that we will deploy
a specific technology solution, we will continue to operate and support that
solution until a replacement is found that offers improvement and better value
to the customer.
Will the new combined company retain the current core services of both Eagle
and Circle?
Yes. Our services are very complementary. The combination allows us to offer
our clients a broader range of products through a single "one-stop shop".
What's the benefit for customers?
As mentioned before, EGL and Circle have strengths, skills and core
competencies that complement each other. There is little overlap of product
lines and customer bases. Circle's international transportation network,
customs brokerage expertise and logistics volumes complement EGL's strength in
the USA with its primary business lines of domestic P&D, line-haul and freight
forwarding operations. Both companies are expected to be able to cross sell to
each other's customers and provide a more complete and efficient service
package. Customers want a single source provider for logistics and
transportation. EGL/Circle combined are anticipated to bring a superior
capability to meet those needs both domestically and internationally.
What is the financial impact of this acquisition to the bottom line?
We anticipate that this transaction will be accounted for as a pooling of
interests. The revenues of the new company are expected to exceed $1.5 billion.
Will there be a change to our annual fiscal year?
EGL has changed its fiscal year-end from September 30 to December 31 in order
to facilitate the reporting requirements of the combined company and investment
community comparisons with peer companies.
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Will the company have to add debt?
No additional long-term debt is anticipated as a result of the transaction.
What are the financial benefits of the transaction?
Some of the anticipated benefits include: better market capitalization and
improved liquidity, a stronger balance sheet, improved cash flow, and
opportunity for earnings growth. For EGL, there is the additional factor that
capital expenditures previously intended to build an international
infrastructure can now be considered for other uses, particularly in the IT
area for platform development, and effective systems integration. Ultimately,
the combined company intends to deploy superior IT resources capable of
leveraging the flexibility of the Internet and e-commerce tools on a global
scale.
What are the benefits of the merger to the employees?
Employees can expect to be part of a stronger company with a more complete
service offering and a larger client base from which to grow. It's anticipated
that broader career opportunities will become available for those who want to
expand their overall knowledge and skills in the logistics business. EGL/Circle
are expected to emerge as a recognized leader in both international and
domestic heavyweight forwarding and logistics. There is substantial potential
for the combined organization to grow its revenues and profits, which
translates into greater security and potential financial reward for employees.
How dramatically will the employee environment change?
Of course, the new organization will be much larger than the two companies
separately - and this is anticipated to be beneficial to employees. We intend
to immediately set to the task of integrating the two companies - with a focus
on collaborative work relationships that will benefit the employees and the
current customers of both companies, while attracting new customers.
We will continue our strong emphasis on outstanding customer service. We will
be able to offer a more comprehensive package of services to customers and as
employees we will have the opportunity to learn different areas of logistics
and transportation services. We think this will be a very exciting and
rewarding time for all employees. Again, complementary strengths contribute to
the value of this combination. Circle is known for its strong operations and
extensive international expertise while EGL has a reputation as an excellent
marketing company and one of the fastest-growing and most successful domestic
freight forwarders in North America. Both have reputations for excellent
service.
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What will the company be named?
Following the completion of the merger and system integration, the company's
name and branding in the market will transition to EGL Eagle Global Logistics.
This will occur over time, first in the USA to ensure there is a single brand
recognized by customers and to avoid confusion. It will take place overseas
over a longer period of time.
Will the foreign and domestic services be incorporated, or stay separated?
The operational structure and its future design is one of the tasks for the
integration team. For the time being, there will be no changes to the current
operating structures of both companies. Once the integration is completed,
however, it only makes sense to offer our customers integrated domestic and
international services - where the customer desires a combined approach.
It also makes sense to leverage the assets and operations of the two companies
where capacity is available. Circle has a significant amount of freight in the
USA that moves between gateways, and from gateways to origin or destination USA
cities. Typically, this traffic is handled by outside cartage agents and
for-hire trucking companies. That traffic is ideal for the EGL's domestic
infrastructure, which has dedicated pickup and delivery and line-haul networks.
Conversely, where Eagle today is picking up international shipments and
tendering them directly to airlines, that freight could be transitioned to
Circle into their gateway network to improve load factor and yields on our
consolidations. Both of these are excellent opportunities to gain operating
synergies, improve service and reduce costs.
What can employees expect from a combination of our companies?
Employees can expect to be part of a combined organization with an aggressive
vision of the future, a desire to excel and reward people for superior
performance, and the drive to achieve strong financial results that support the
vision. EGL and Circle both consider employees our greatest asset. We offer the
customer a knowledge base, expertise and experience reflecting the best and
brightest logistics professionals in the domestic and international arenas.
Together, we will form what will soon be recognized as a global logistics
company that has no equal in our industry.
Will the company remain non-asset based?
Yes. Both Eagle and Circle operate on the non-asset-based business model. This
principle will remain the same.
What is management doing to provide employees with a smooth transition?
Employees will be provided with ongoing communications explaining the terms of
the agreement, progress towards the completion of the merger and integration
plans. Since both Eagle and Circle are publicly traded companies, information
and disclosures about the merger are filed with the Securities and Exchange
Commission. These filings are available to the public and can be viewed at the
SEC's web site, www.sec.gov.
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In addition, fact sheets on various issues of the merger, and regular
information updates are expected to be published on both companies' web sites.
Where can employees go to get answers to individual questions?
All questions will be answered to the best of management's abilities with
information considered to be accurate at the time. Please understand that some
questions may not be answerable in the weeks prior to the approval of the
merger by regulatory authorities, and both companies' shareholders. But as we
move through the merger and integration process, more answers will be available
and communicated to all employees.
If your local manager is unable to answer specific questions - you can send
your question to the e-mail question box at: [email protected].
FORWARD LOOKING STATEMENT AND INVESTOR NOTICE
Except for historical information contained herein, the matters set forth in
this document are forward-looking statements that are dependent on certain
risks and uncertainties, including, but not limited to, such factors as
dependence on international trade and worldwide economic conditions, severe
economic conditions in certain regions serviced EGL and Circle, market demand,
pricing risks associated with operations outside the U.S., currency
fluctuations, competitive pressures, imbalances of capacity and demand in
certain trade lanes and service areas, the EGL's ability to integrate
successfully businesses that it acquires, the increasing complexity of the
EGL's information technology, the effect of the Company's accounting policies,
and other risk factors detailed in EGL's SEC filings.
The statements in this employee communication regarding the expected date of
closing of the merger, future financial and operating results, target growth
rates, benefits of the merger, tax and accounting treatment of the merger,
future opportunities and any other effect, result or aspect of the proposed
transaction and any other statements, which are not historical facts, are
forward looking statements. Such statements involve risks and uncertainties,
including, but not limited to, costs and difficulties related to the
integration of acquired businesses, costs, delays, and any other difficulties
related to the merger, failure of the parties to satisfy closing conditions,
risks and effects of legal and administrative proceedings and governmental
regulation, future financial and operational results, competition, general
economic conditions, ability to manage and continue growth, risks of
international operations and other factors detailed in EGL's and Circle's Forms
10-K and other filings with the Securities and Exchange Commission ("SEC").
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual outcomes may vary materially
from those indicated.
EGL has filed a registration statement on Form S-4 with the SEC. In the
connection with the merger, EGL and Circle have mailed a joint proxy
statement/prospectus, which is part of the registration statement, to
shareholders of EGL and Circle containing information about the merger.
Shareholders of EGL and Circle are urged to read the joint proxy
statement/prospectus included in the registration statements and any other
relevant documents filed with the SEC. The joint proxy statement/prospectus
contains important information about EGL, Circle, the merger, the persons
soliciting proxies related to the merger, and related matters that should be
considered by shareholders before making any decision regarding the merger and
related transactions. The registration statement, joint proxy statement
prospectus and other documents are available free of charge on the SEC's web
site at www.sec.gov and from the EGL and Circle contacts listed in the
documents. In addition to the registration statement and the joint proxy
statement/prospectus, EGL and Circle file annual, quarterly and special
reports, proxy statements and other information with the SEC that are also
available free of charge at the SEC's web site and from EGL and Circle.
In addition, the identity of the people who, under SEC rules, may be considered
"participants in the solicitation" of EGL shareholders and Circle shareholders
in connection with the proposed merger, and any description of their interests,
is available in an SEC filing under Schedule 14A made by both EGL and Circle on
July 3, 2000.
