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Filed by: Circle International Group, 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.
Commission File No.: 0-8664
Subject Company: EGL, Inc.
Commission File No.: 0-27288
EMPLOYEE COMMUNICATION
CIRCLE - EAGLE MERGER
QUESTIONS AND ANSWERS
July 31, 2000
Over the past three weeks, we have had good feedback from the field with
questions about the proposed merger of 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.
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.
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.
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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 essential to a smooth transition and are necessary to help the company
complete the integration period. During the course of the integration, some
positions will be offered relocation to the new corporate headquarters in
Houston. Those who will not be moving to Houston will be provided a transition
package in recognition of their continued support of the company during the
integration process, and to assist them in the transition of their own careers.
WILL THERE BE EARLY RETIREMENT PACKAGES AVAILABLE?
Early retirement packages are generally offered by companies that are
anticipating a reduction in their workforce. The merger of Eagle and Circle does
not anticipate an overall workforce reduction. There won't be any early
retirement packages as part of the integration and transition plan.
WHAT HAPPENS TO OUR BENEFITS? WILL WE GO ON THE EAGLE PLAN OR STAY ON CIRCLE'S?
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, benefits 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 Circle and Eagle 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.
WHAT HAPPENS TO OUR 401(k) PLAN? WILL IT BE ROLLED INTO EAGLE'S? WITH THE
ACQUISITION, DO THE CURRENT 401(k) CIRCLE SHARES VEST IMMEDIATELY UPON
COMPLETION OF THE MERGER? DO I HAVE TO REAPPLY OR SIGN UP AGAIN FOR THE 401(k)?
SAME QUESTION FOR THE EMPLOYEE STOCK PURCHASE PLAN.
The Circle 401(k) plan will continue for the immediate future. Circle's 401(k)
plan does not provide for accelerated vesting in a merger situation. As we work
out the details of these and other benefits following the merger, full and
complete communications will be provided to all employees.
The Circle employee stock purchase plan will continue through its current cycle.
Eagle in the USA currently has an employee stock purchase plan in place which is
very similar to Circle's.
DOES MY SENIORITY, OR SERVICE START DATE CHANGE AS A RESULT OF THE MERGER?
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No. Your service start date remains unchanged.
WILL WE HAVE TO REAPPLY OR INTERVIEW WITH EAGLE ONCE THE ACQUISITION IS
COMPLETED.
No. The only interviewing required will be if an employee chooses to pursue a
new opportunity within the combined company.
DOES EAGLE HAVE A QUALITY PROGRAM?
Yes, their quality management system is ISO-certified in most of their USA
locations.
WILL THE CIRCLE INCENTIVE PLAN FOR 2000 CHANGE?
No, the Circle incentive plan will remain intact for 2000.
WILL EAGLE'S SALES PROGRAM REPLACE CIRCLE'S?
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.
WHO WILL BE PRESIDENT OF THE NEW COMPANY?
Upon successful completion of the merger, Jim Crane is to assume the role of
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 COMPLETE?
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The process is underway to obtain the appropriate regulatory approvals, and the
approval of both Eagle and Circle shareholders. We currently expect the
transaction to be completed sometime in late September this year.
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, 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, Circle and Eagle 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, Circle/Eagle
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 some current Circle operating systems may be utilized by
the post-merger company. As the details of the systems integration plan are
worked out, these will be communicated to employees.
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 true single global IT system. It is expected to represent a major
competitive advantage, particularly in the international arena.
WHAT SYSTEMS WILL BE USED FOR OCEAN AND BROKERAGE, AND WHAT FOR AIR OPERATIONS?
HOW ABOUT WAREHOUSING, LOGISTICS AND INVENTORY MANAGEMENT?
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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 through 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 CIRCLE
AND EAGLE?
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, Circle and EGL 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. Circle/EGL
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 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 strong balance sheet, good cash flow, and opportunity for
substantial 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
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capable of leveraging the flexibility of the Internet and e-commerce tools on a
global scale unlike any competitor.
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. Circle/EGL
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.
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
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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 our
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 OF CIRCLE EXPECT FROM THIS FAIRLY YOUNG COMPANY?
Circle 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 Circle and Eagle 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, regular
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.
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 Circle: [email protected]
FORWARD LOOKING STATEMENT AND INVESTOR NOTICE
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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 by the Company, 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 Company's ability to integrate successfully businesses
that it acquires, the increasing complexity of the Company's information
technology, the effect of the Company's accounting policies, and other risk
factors detailed in the Company'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. 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 plans to file with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-4. In the connection with the merger, EGL and
Circle expect to mail a joint proxy statement/prospectus, which will be 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
when it is filed and any other relevant documents filed with the SEC. The joint
proxy statement/prospectus will contain 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. Once they are filed with the SEC,
the registration statement, joint proxy statement prospectus and other documents
will be 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.
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