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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
under Section 14(d)(4) of the
Securities Exchange Act of 1934
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American Freightways Corporation
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(Name of Subject Company)
American Freightways Corporation
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(Name of Persons Filing Statement)
Common Stock, $0.01 Par Value
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(Title of Class of Securities)
02629V108
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(CUSIP Number of Class of Securities)
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Frank Conner
American Freightways Corporation
2200 Forward Drive
Harrison, Arkansas 72601
(870) 741-9000
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(Name, address and telephone number of person
authorized to receive notices and communications
on behalf of the persons filing statement)
[x] Check the box if the filing relates solely to preliminary
communications
made before the commencement of a tender offer.
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10 AMERICAN FREIGHTWAYS ANNOUNCEMENT
11 HARRISON, ARKANSAS
12 TAPE TRANSCRIPTION
13 OF
14 QUESTION AND ANSWER SESSION
15 NOVEMBER 13, 2000
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18 TRANSCRIPT OF MAIN PRESENTATION
PREVIOUSLY FILED
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1 JOHN SHERMAN (MODERATOR): WE'D LIKE TO JUST TAKE A
MOMENT AND ASK SOME QUESTIONS FROM THE CROWD HERE, AH, WE'VE GOT ONE
RIGHT UP FRONT HERE.
2 SPEAKER: I'M DIRECTOR OF PRICING
3 HERE AT AMERICAN. AND I'M JUST CURIOUS HOW LONG IT
4 WOULD BE BEFORE THE DEAL IS CONSUMMATED TO THE POINT
5 WHERE OUR TWO COMPANIES, VIKING AND AMERICAN, WILL
6 BEGIN SHARING FREIGHT.
7 FRED SMITH: WELL, I THINK THE
8 FINANCIAL TRANSACTION WILL BE MOSTLY COMPLETE BY
9 JANUARY. AND THEN TOTALLY COMPLETE -- I THINK THE
10 TARGET DATE'S THE FIRST WEEK IN MARCH. NOW, WE
11 CAN'T REALLY DO ANYTHING OPERATIONALLY UNTIL AFTER
12 THE FIRST HALF OF THE TRANSACTION IS COMPLETED,
13 WHEN THE TENDER IS DONE. AND I THINK THAT'S RIGHT
14 AFTER THE FIRST OF THE YEAR. BUT REGARDING THE
15 INTERCHANGE OF FREIGHT, I THINK THAT WOULD BE UP TO
16 DOUG AND TOM, AND THEY WOULD BE A LOT MORE ABLE TO
17 TALK ABOUT IT THAN I CAN. SO I WOULD ASK THEM TO
18 ANSWER THAT.
19 DOUG DUNCAN: THE INFORMATION I'VE
20 GOTTEN IS I THINK BY MID TO THE LATTER PART OF
21 DECEMBER WE WILL ACTUALLY BEGIN TO START DOING THE
22 PLANNING. WE WILL THEN BE FREE TO HAVE DISCUSSIONS
23 AS TO HOW WE ADDRESS SOME OF THOSE ISSUES. THAT
24 WAY, WE'LL BE IN PLACE TO EXECUTE THEM AS SOON AS
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1 THE TRANSACTION IS COMPLETE.
2 TOM GARRISON: I WOULD EXPECT THAT WE
3 WOULD BE ABLE TO TAKE OVER THE INTERCHANGE OF ANY
4 FREIGHT THAT WE'RE HANDING OFF TO OTHER CARRIERS IN
5 A PRETTY QUICK ORDER. AND THEN AS FAR AS MARKETING
6 AND SELLING ACROSS THE TWO COMPANIES, IT WOULD BE
7 VERY IMPORTANT THAT WE KNEW OUR PRICING STRATEGIES
8 WERE VERY SOUND AND VERY CONTROLLED AND THAT WE'RE
9 VERY CAREFUL TO CONTROL WHAT KIND OF BUSINESS WE
10 GET ON TO THE TRUCKS AND WHAT BUSINESS IS MOVING
11 BACK AND FORTH, HOW MUCH CAPACITY IT'S TAKING UP
12 AND HOW MUCH YIELD AND PROFIT IT'S PRODUCING FOR
13 US. THERE IS NO REASON WE SHOULD BE HAULING
14 TRAFFIC BETWEEN THE TWO COMPANIES THAT ISN'T
15 PROFITABLE.
16 JOHN SHERMAN: LET ME ASK YOU THIS, AS
17 THE MANAGEMENT COMMITTEE, WHAT QUESTIONS DO YOU
18 THINK WE'RE GOING TO HAVE FROM OUR ASSOCIATES IN
19 THE FIELD?
20 SPEAKER: ARE THEIR BENEFITS GOING
21 TO BE CHANGING?
22 JOHN SHERMAN: THE QUESTION IS, WHAT ARE
23 THE BENEFITS FOR THEM? ARE WE GOING TO HAVE ANY
24 BENEFIT CHANGES? ANYTHING THAT WILL CHANGE FOR THE
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1 ASSOCIATES THAT ARE IN THE FIELD?
2 DOUG DUNCAN: WELL, DAY ONE, EVERYTHING
3 REMAINS THE SAME, YOU KNOW, AMERICAN IS AMERICAN,
4 VIKING IS VIKING. AND WE'LL GO DOWN THAT PATH. AND THEY
5 WILL REMAIN SEPARATE ENTITIES BECAUSE ONE OF THE
6 THINGS THAT WE HAVE TO BE VERY CLEAR ABOUT, IN MY
7 MIND AT LEAST, IS TO STAY FOCUSED ON REGIONAL
8 TRANSPORATION. I CAN TELL YOU, A LOT OF PEOPLE
9 WILL TRY TO PAINT US WITH A BRUSH NOW TO SAY WE'RE
10 NOW A NATIONAL COMPANY. AND WE ARE NOT. WE'RE A
11 REGIONAL TRANSPORTATION COMPANY THAT HAPPENS TO
12 SERVE ALL REGIONS OF THE COUNTRY. THE REGIONS ARE
13 DIFFERENT. I THINK TO KEEP THAT FOCUS DIFFERENT,
14 WE WILL REMAIN DIFFERENT IN THE WAY WE MANAGE AND
15 THE WAY WE OPERATE. WE'LL FIND WAYS TO PUT THEM
16 TOGETHER. THERE WILL BE WAYS TO PUT THEM
17 TOGETHER THAT MAKE SENSE FOR THE COMPANIES AND FOR
18 THE EMPLOYEES. AND THERE WILL BE REASONS TO KEEP
19 THEM SEPARATE AS WELL. SO, YOU KNOW, AS WE GET
20 THROUGH THAT, IF WE INTEND TO MAKE ANY CHANGES AND
21 IF WE INTEND TO UNIFY THINGS, WE'LL HAVE TO OPENLY
22 AND HONESTLY COMMUNICATE THAT AS WE GO ALONG. BUT,
23 YOU KNOW, FOR THE FORESEEABLE FUTURE, EACH WILL
24 STAY SEPARATE, EACH WILL HAVE IT'S OWN BENEFITS.
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1 AND WHATEVER'S BEEN SUCCESSFULL FOR YOU TODAY,
2 WILL BE SUCCESSFULL FOR YOU TOMORROW. AND MY
3 BELIEF IS THAT THE COMBINATION IS GOING TO BE
4 POSITIVE, NOT NEGATIVE. SO, IF ANYTHING, I THINK
5 IT WILL TEND TO IMPROVE THINGS GOING FORWARD AND
6 I DON'T ANYTHING WILL BE TAKEN AWAY.
7 JOHN SHERMAN: ANY OTHER QUESTIONS?
8 EITHER THINGS THAT ARE GOING ON HERE IN THE HOME
9 OFFICE, INTEGRATION OF SYSTEMS, ANYTHING LIKE THAT?
10 OR, AGAIN, WHAT OUR ASSOCIATES MAY BE THINKING
11 ABOUT?
12 FRED SMITH: I'LL TELL YOU ONE THING,
13 WE'RE EXCITED
14 TO HAVE THIS HEADQUARTERS IN HARRISON, ARKANSAS.
15 I CAN TELL YOU THAT MUCH. IT'S A GREAT PART OF THE
16 COUNTRY AND WONDERFUL PEOPLE. SO I HOPE THERE IS
17 NO CONCERN ABOUT THAT.
18 SHERIDAN GARRISON: ONE QUESTION THAT OUR
19 ASSOCIATES MAY BE INTERESTED IN, YOU KNOW,
20 TRADITIONALLY, DURING THE FIRST WEEK OF MARCH EACH
21 YEAR, WE'VE ADJUSTED WAGES AND INTRODUCED NEW
22 BENEFITS AND WHAT HAVE YOU. AND WE WILL BE DOING
23 THAT AGAIN THIS COMING MARCH, FIRST SUNDAY IN
24 MARCH. WON'T CHANGE A THING. WE'LL STILL BE
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1 LOOKING AT THINGS AND DOING EVERYTHING WE CAN TO
2 UPGRADE PEOPLE'S PAY AND THEIR BENEFITS AND IMPROVE
3 WORKING CONDITIONS AND HAVE A COMPANY THAT
4 EVERYBODY'S PROUD TO BE ASSOCIATED WITH. THAT WILL
5 STAY THE SAME.
6 FRED SMITH: LET ME JUST ADD SOMETHING
7 TO THAT. I THINK IT'S VERY IMPORTANT THAT ALL OF
8 THE AMERICAN FREIGHTWAYS ASSOCIATES UNDERSTAND THE
9 FEDEX STRATEGY OF "COMPETING COLLECTIVELY, BUT
10 OPERATING INDEPENDENTLY". TIME AND TIME AGAIN OVER
11 THE YEARS, I'VE WATCHED COMPANIES TRY TO DO TOO
12 MANY THINGS FOR TOO MANY DIFFERENT MARKET SEGMENTS,
13 TRY TO BE ALL THINGS TO ALL PEOPLE. AND THAT NEVER
14 WORKS. SO OUR STRATEGY IS TO HAVE A FAMILY OF
15 COMPANIES. THEY'RE IDENTIFIED WITH A LOT OF
16 DIFFERENT SIMILAR LOGOS OR PEOPLE KNOW THAT THEY'RE
17 PART OF THE SAME FAMILY, BUT THEY HAVE THEIR OWN
18 CEO, THEY FOCUS ON THEIR OWN MARKET SEGMENT AND THE
19 COST STRUCTURE AND THE BENEFITS AND THE WAGES AND
20 THINGS LIKE ARE DRIVEN BY WHAT THAT MARKET
21 WILL BEAR, AND THE CEO AND HIS OR HER MANAGEMENT
22 TEAM IS THEN HELD RESPONSIBLE FOR OPERATING THE
23 COMPANY. AS DOUG WILL TELL YOU, WHEN FED-EX
24 CORPORATION ACQUIRED VIKING, WE DIDN'T DO ANYTHING
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1 TO VIKING. VIKING HAS RUN INDEPENDENTLY, AND ALL
2 OF THOSE ISSUES ARE DECIDED BY THE MANAGEMENT TEAM
3 INSIDE VIKING. THE SAME THING IS GOING TO BE
4 TRUE HERE. TOM'S THE CEO OF AMERICAN FREIGHTWAYS
5 AND TOM AND HIS TEAM ARE GOING TO MAKE THOSE
6 DETERMINATIONS. NOW, OUR LTL GROUP WILL OBVIOUSLY
7 TRY TO GET THE SYNERGIES OUT OF NOW HAVING 48 STATE
8 COVERAGE, BUT WITH FOCUSED REGIONAL OPERATING
9 COMPANIES. AND ALL OF YOU UNDERSTAND BETTER THAN I
10 DO THE GROWTH AREAS ARE IN THE REGIONAL MOVEMENT.
11 THE LONG-DISTANCE LTL BUSINESS IS A COMMODITY
12 BUSINESS. IT'S GROWING AT A COUPLE OF PERCENT PER
13 YEAR. PEOPLE ARE CHANGING THEIR DISTRIBUTION
14 PATTERNS SO THEY'VE GOT REGIONAL DISTRIBUTION
15 CENTERS. THEY WANT OVERNIGHT SERVICE OR TWO-DAY
16 REGIONAL SERVICE. AND WE'RE GOING TO BE ABLE TO
17 GIVE THEM THAT ON AN UNPRECEDENTED LEVEL IN ALL
18 REGIONS OF THE UNITED STATES. AND THEN
19 SELECTIVELY, YOU KNOW, ON AN INTERREGIONAL BASIS,
20 JUST AS YOU'RE DOING WITH AMERICAN FLYER AND SO
21 FORTH WITHIN THE AMERICAN FREIGHTWAYS OPERATING
22 AREA TODAY. AND AS TIME GOES ON AND DOUG AND TOM
23 AND TILTON GORE, THE CEO OF VIKING, CAN WORK IT
24 OUT, SELECTIVE PROFITABLE INTERREGIONAL MOVEMENTS
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1 BETWEEN AMERICAN FREIGHTWAYS AND VIKING. SO IT'S
2 VERY IMPORTANT THAT EVERYBODY UNDERSTANDS THAT WE'RE
3 NOT JUST SAYING THESE THINGS TO MAKE EVERYBODY FEEL
4 GOOD ON THIS DAY WE'RE ANNOUNCINING THIS DEAL. WE
5 HAVE A HISTORY OF "OPERATING INDEPENDENTLY AND
6 COMPETING COLLECTIVELY". AND IT IS A POWERFUL
7 STRATEGY. A STRATEGY, I THINK, THAT WILL CONTINUE
8 TO BRING GREAT SUCCESS TO OUR COMPANY AND LOTS OF
9 OPPORTUNITIES FOR OUR TEAMMATES IN WHATEVER
10 OPERATING COMPANY. SO I SEE VIRTUALLY NO DOWN SIDE
11 FOR THE AMERICAN FREIGHTWAYS ASSOCIATES AND
12 TREMENDOUS UPSIDE.
13 JOHN SHERMAN: THANK YOU, FRED. YES,
14 SHERIDAN?
15 SHERIDAN GARRISON: JON, FOR ONE THING, I FIND
16 TO LOOK AT OTHER THINGS THAT BOTH VIKING AND FEDEX
17 DO AND DO DIFFERENTLY THAN WHAT WE DO AND SEE IF
18 THERE ARE WAYS THAT WE CAN IMPORT IDEAS INTO OUR
19 COMPANY HERE AND TAKE ADVANTAGE OF THE KNOWLEDGE THAT
20 VIKING HAS AND THE FEDEX PEOPLE HAVE SO THAT WE
21 CAN WIND UP WITH THE BEST OF ALL WORLDS. OF
22 COURSE, WE WILL BE HAPPY TO SHARE WHAT WE'RE DOING
23 WITH THEM. I THINK WE EACH GOT WHERE WE HAVE
24 GOTTEN -- WHICH WE ARE ALL SUCCESSFUL COMPANIES --
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1 BY HAVING GOOD OPERATING SYSTEMS AND EVERYTHING
2 LIKE THAT AND GOOD POLICIES, GOOD -- FEDEX, FOR
3 INSTANCE, HAS A GUARANTEED FAIR TREATMENT PROCESS,
4 WE HAVE AMERICAN DUE PROCESS. AND I THINK
5 THAT WE PATTERNED SOME OF OUR STUFF OFF OF YOURS.
6 YOU MAY HAVE MADE IMPROVEMENTS SINCE WE DID THAT.
7 SO WE'LL LOOK AT ALL THOSE THINGS AND SEE WHAT WE
8 CAN DO TO GET THE BEST OF EVERYTHING OUT THERE.
9 AND I THINK THERE WILL BE A TREMENDOUS AMOUNT OF
10 THINGS OUT THERE THAT WE CAN SWAP BACK AND FORTH
11 ON. DUNCAN, I KNOW, IS LOOKING AT IT THAT WAY.
12 DOUG DUNCAN: ABSOLUTELY. AND I THINK
13 FRED BRINGS UP A GREAT POINT IN THAT YOU CAN LOOK
14 AT WHAT'S HAPPENED AT VIKING AND SEE WHAT IT'S LIKE
15 TO BE PART OF FEDEX, YOU KNOW. THE CULTURE HASN'T
16 CHANGED, IT'S FLOURISHED. THE BENEFITS STILL REMAIN
17 THE SAME, AND WE HAVE THE OPPORTUNITY TO COMBINE
18 WITH FEDEX WHERE IT MADE A LOT OF SENSE,
19 ESPECIALLY IN THE TECHNOLOGY AREAS, TO UTILIZE
20 THINGS THAT FEDEX HAD ALREADY DEVELOPED AND TO
21 STAY SEPARATE IN THE AREA OF BENEFITS AND OTHER
22 THINGS THAT WE PARTICULARLY WANTED TO KEEP FOR OUR
23 OWN COMPANY. I THINK YOU'RE GOING TO SEE THE EXACT
24 SAME THING HAPPEN AT AMERICAN. WE HAVE THE FREEDOM
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1 TO CHOOSE WHAT WE THINK WILL MAKE BEST SENSE FOR
2 THE BUSINESS TO KEEP IT SEPARATE AND ALSO KIND TO
3 STEAL FROM THE FED-EX SIDE OF THE HOUSE THE THINGS
4 THAT WE WANT TO TAKE ADVANTAGE OF.
5 SHERIDAN GARRISON: ONE THING I LIKE ABOUT IT,
6 THIS GENTLEMAN HERE HAS AGREED TO LET ME HAVE AN
7 OFFICE HERE AND SOME SECRETARIAL HELP SO I CAN
8 STILL BE ASSOCIATED WITH THIS COMPANY ON THE GROUND
9 FLOOR, SO TO SPEAK. I DON'T WANT TO LEAVE IT. I
10 WANT TO STICK AROUND AND HAVE SOME FUN WITH YOU
11 ALL.
12 FRED SMITH: I SURE KNOW ONE THING,
13 JOHN, THAT AS I SAT HERE AND THOUGHT ABOUT IT,
14 THERE IS ONE AREA WHERE THERE WILL BE CHANGE.
15 OBVIOUSLY, SINCE THE AMERICAN FREIGHTWAYS
16 SHAREOWNERS ARE SWAPPING STOCK WHEN IT'S
17 APPROPRIATE -- SOME OF THEM WILL BE TAKING CASH --
18 BUT WHEN IT'S APPROPRIATE FOR FED-EX CORPORATION
19 SHARES. THERE WILL BE SOME CHANGES TO THE STOCK
20 PROGRAMS. THAT'S JUST A GIVEN. BUT THE OTHER
21 THINGS INSIDE AMERICAN FREIGHTWAYS WILL NOT BE
22 CHANGED AS A RESULT OF THIS ACQUISITION. JUST AS
23 SHERIDAN SAID, WE'LL TRY TO GET THE BEST IDEAS FROM
24 WHEREEVER THEY MIGHT COME, AND THEN IF TOM THINKS
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1 THAT THEY'RE APPLICABLE FOR AMERICAN FREIGHTWAYS
2 WITH HIS MANAGEMENT TEAM, I'M SURE YOU CAN FEEL
3 FREE TO USE THEM. ON THE OTHER SIDE OF THE COIN,
4 MAYBE THERE ARE SOME THINGS THAT YOU'RE DOING THAT
5 DOUG MIGHT SEE AND WANT TO SUGGEST TO VIKING THEY
6 MIGHT USE. AND AS SHERIDAN MENTIONED, HE'S GOING
7 TO BE AROUND. SO WE'RE NOT GOING TO LOSE HIS
8 ADVISE AND COUNSEL.
9 SHERIDAN GARRISON: ONE THING THESE PEOPLE
10 HAVE DONE SO EXTREMELY WELL IN OUR COMPANY IS ADAPT
11 TO CHANGE. HERE A COUPLE OR SO YEARS AGO, WE
12 INTRODUCED THE LARGEST SINGLE RECONFIGURATION OF A
13 LINE HAUL OPERATION IN THE HISTORY OF LTL TRUCKING.
14 AND OUR PEOPLE WENT RIGHT ALONG. OF COURSE, WE HAD
15 A HICCUP OR TWO, BUT MY GOODNESS, PEOPLE WENT
16 ALONG, SUPPORTED IT, WORKED THEIR TAILS OFF TO GET
17 IT IN PLACE. AND TODAY IT'S WHAT WE CALL AMERICAN
18 FLYER. AND IT'S REALLY A GREAT SYSTEM. BUT WE
19 COULDN'T HAVE DONE IT IF PEOPLE HADN'T BEEN WILLING
20 TO CHANGE. YOU KNOW, WE DON'T LIKE TO WAKE UP IN A
21 NEW WORLD EVERYDAY. WE LIKE TO HAVE SOME DEGREE OF
22 PREDICTABILITY ABOUT OUR JOBS. I THINK WE
23 UNDERSTAND THAT IF WE'RE TO GROW AND PROSPER AND BE
24 THE KIND OF COMPANY WE SHOULD BE FOR OUR
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1 SHAREHOLDERS, FOR OUR PEOPLE, OUR FAMILIES AND WHAT
2 HAVE YOU, WE WILL HAVE TO CHANGE. SO WE'RE NOT
3 AGAINST CHANGE. WE'RE IN FAVOR OF IT.
4 SPEAKER: I'M PAT BROWN, DIRECTOR OF
5 PROPERTIES AND CORPORATE ARCHITECT, NEW
6 CONSTRUCTION. IN REVIEWING THE SERVICE MAP THAT
7 VIKING HAS, OBVIOUSLY, THERE IS ABOUT A HANDFUL OF
8 FACILITIES THAT KIND OF OVERLAP AND PLAY AGAINST
9 EACH OTHER. HOW SOON DO YOU BELIEVE OR DO YOU
10 THINK THAT YOU WILL BEGIN LOOKING AT THOSE
11 OPERATIONS?
12 FRED SMITH: I THINK THAT'S PROBABLY --
13 DOUG AND TOM, MAYBE YOU COULD ANSWER.
14 TOM GARRISON: AS WE DISCUSSED EARLIER,
15 FOR THIS POINT IN TIME, AMERICAN FREIGHTWAYS AND
16 VIKING ARE SISTER COMPANIES THAT CONTINUE TO BE
17 OPERATED COMPLETELY SEPARATELY. WE EXPECT IN THESE
18 MARKETS WHERE THERE IS OVERLAP, THAT THERE WILL BE
19 GROWTH OCCUR AS WE DO START EXCHANGING FREIGHTS AND
20 WE DO. AND IN THE LONG RUN, IF WE DO DO ANYTHING
21 WITH THE COMPANY AS FAR AS MERGING THEM CLOSER
22 TOGETHER, WE'LL LOOK AT THAT AT THAT POINT IN TIME.
23 AGAIN, GROWTH WOULD BE SUCH THAT THERE WOULD NOT BE
24 ANY LOSS OF PEOPLE, ANY REDUCTION IN WORK FORCE OR
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1 ANYTHING LIKE THAT. IT WOULD ACTUALLY CREATE MORE
2 OPPORTUNITY BECAUSE OF THE FACT THAT WE COULD PICK
3 UP AND DELIVER TO BOTH WEST COAST AND EAST COAST
4 AND REGIONAL FREIGHT FROM THOSE SAME AREAS. SO
5 ACTUALLY IT WOULD DO NOTHING BUT INCREASE THE
6 PROFITABILITY OF THE OPERATIONS. BUT THAT WILL BE
7 QUITE SOME TIME DOWN THE ROAD IF THAT'S EVEN
8 CONSIDERED.
9 JOHN SHERMAN: EXCELLENT QUESTION. WE
10 HAVE A QUESTION HERE.
11 FRED SMITH: STEVE GRIFFITH, PRICING
12 RESEARCH. DOES THE STRATEGY INCLUDE THE
13 ACQUISITION OF A TRUCK LOAD CARRIER?
14 SPEAKER: WELL, YOU KNOW, STEVE,
15 WE'LL LOOK AT ANYTHING. HAVING SAID THAT THE,
16 TRUCKLOAD BUSINESS IS VERY DIFFICULT TO
17 DIFFERENTIATE ONE CARRIER FROM ANOTHER. I THINK
18 THE LARGEST MARKET SHARE IN THE TRUCKLOAD BUSINESS
19 IS A COUPLE OF PERCENTAGE POINTS, MAYBE A LITTLE
20 BIT MORE. THAT'S SCHNEIDER. MOST OF THE BUSINESS
21 REMAINS IN THE HANDS OF RELATIVELY SMALL ENTITIES.
22 THERE AREN'T MANY ECONOMIES OF SCALE IN THE
23 TRUCKLOAD BUSINESS. IN FACT, IF YOU STUDY THEM, IT
24 WOULD APPEAR IN MOST CASES THAT THEY'RE
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1 DISECONOMIES OF SCALE. AS THEY GET BIGGER, THEIR
2 OVERHEAD GETS GREATER AND SO FORTH. THAT'S A LOT
3 DIFFERENT THAN FEDEX CORPORATION AND NOW OUR THREE
4 WONDERFUL NETWORKS. WE HAVE OUR EXPRESS NETWORK,
5 NORTH AMERICAN AND WORLDWIDE. WE HAVE OUR GROUND
6 PACKAGE NETWORK THROUGHOUT NORTH AMERICA. NOW
7 WE'VE GOT THIS WONDERFUL REGIONAL LTL FREIGHT
8 SYSTEM THAT COVERS VIRTUALLY THE ENTIRE COUNTRY.
9 AND WE INTEND TO BE NOT A TWO OR THREE PERCENT
10 MARKET SHAREHOLDER IN THE LTL BUSINESS. WE WANT TO
11 DOMINATE THIS BUSINESS. WE WANT TO BE CLEARLY THE
12 NUMBER ONE ENTITY AND WE CAN BE. I'M VERY
13 CONFIDENT OF THAT. I KNOW SHERIDAN FEELS THAT WAY
14 AND TOM AND DOUG FEEL THAT WAY. I DON'T KNOW THAT
15 THAT OPPORTUNITY EXISTS IN THE TRUCKLOAD BUSINESS.
16 WHAT DO YOU THINK? DO YOU AGREE WITH THAT?
17 STEVE GRIFFITH: IT'S A VERY RISKY
18 BUSINESS. AND THE OTHER QUESTION, DO WE EXPECT --
19 ARE THERE ANY EXPECTATIONS THAT UPS WILL DO A
20 SIMILAR MOVE AND GET INTO THE LTL BUSINESS?
21 FRED SMITH: WELL, I THINK THAT UPS
22 WILL BE SURPRISED BY THIS. I THINK UPS
23 UNDERSTANDS, JUST AS I UNDERSTAND AND AS SHERIDAN
24 UNDERSTOOD AND OUR SENIOR MANAGEMENT TEAM
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1 UNDERSTANDS, THAT WHAT CUSTOMERS ARE LOOKING FOR
2 TODAY ARE TRANSPORTATION COMPANIES THAT CAN SOLVE A
3 BROAD ARRAY OF THEIR PROBLEMS. I'VE BEEN IN THE
4 BUSINESS A LONG TIME, SHERIDAN EVEN LONGER THAN I
5 HAVE. AND BACK WHEN THE INDUSTRY WAS REGULATED AND
6 WHAT HAVE YOU, THERE WERE VERY CLEAR DISTINCTIONS
7 IN EVERYBODY'S MIND. YOU KNOW, YOU HAVE LTL AND
8 THEY WERE IN ONE PART OF THE TRAFFIC MANAGEMENT
9 UNIT, AND THEN YOU HAD THE PACKAGE UNIT OVER HERE.
10 AND INTERNATIONAL, BOY, THAT WAS SOMETHING THAT WAS
11 JUST SO ESOTERIC THAT NOBODY COULD HARDLY TALK TO
12 THOSE PEOPLE. WELL, MOST OF THE COMPANIES TODAY
13 THAT ARE THE REAL GROWTH ENGINES OF THE ECONOMY,
14 THEY DIDN'T EVEN EXIST WHEN THERE WAS A REGULATED
15 TRANSPORTATION BUSINESS. THEY DON'T MAKE THOSE
16 DISTINCTIONS. THEY DON'T CARE THAT HISTORICALLY UPS
17 ONLY CARRIED PACKAGES AND CF CARRIED FREIGHT AND
18 THIS, THAT AND THE OTHER. WHAT THEY WANT IS
19 SOMEBODY TO COME IN AND SOLVE THEIR PROBLEM. THEY
20 WANT TO MOVE SOME PALLETS OF FREIGHT FROM TEXAS TO
21 THE ATLANTA AREA OR THE BOSTON AREA AND THEN HAVE
22 THEM BROKEN APART AND INDIVIDUAL PACKAGES DELIVERED
23 TO INDIVIDUAL STORES. THINGS OF THAT NATURE WHERE THERE
24 IS NO INTERMEDIATE DISTRIBUTION CENTER. SO I'M
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1 VERY CONFIDENT THAT THERE ARE GOING TO BE
2 OPPORTUNITIES FOR OUR OPERATING COMPANIES TO OFFER
3 JOINT PRODUCTS THAT ARE STITCHED TOGETHER BY A
4 COMMON INFORMATION ARCHITECTURE THAT WE CAN PUT
5 RIGHT INTO OUR SHIPPERS SHIPPING LOCATIONS AND INTO
6 THEIR, YOU KNOW, FINANCIAL SYSTEMS AND SO FORTH.
7 AND THAT'S WHAT'S SO EXCITING ABOUT THIS. NOW,
8 THAT'S NOT GOING TO BE LOST ON UPS. THEY ARE SMART
9 PEOPLE DOWN THERE, AND THEY'RE ABLE COMPETITORS.
10 NOW, HOW THEY RESPOND TO THIS, I DON'T KNOW. BUT
11 THEY KNOW WHAT WHAT WE KNOW AND THEY WILL TRY TO
12 RESPOND TO IT. WE KNOW, FOR INSTANCE, THAT UPS
13 TODAY HAS A MAJOR HIRING EFFORT UNDERWAY FOR LTL
14 SPECIALISTS. AND WHAT THEY WANT TO DO IS TO GET
15 PEOPLE TO BREAK UP THEIR LTL SHIPMENTS INTO
16 HUNDRED-WEIGHT SHIPMENTS. WELL, WHEN I TALK TO
17 CUSTOMERS -- AND THIS IS WHY I WAS SUCH A PEST WITH
18 SHERIDAN OVER THIS PERIOD OF TIME -- AS I TALK TO
19 CUSTOMERS, THAT'S NOT WHAT THEY WANT TO DO. WHAT
20 THEY WANT TO DO IS JUST WHAT I DESCRIBED. THEY
21 WANT TO MOVE IT TO A FREIGHT SYSTEM, AND THEN IF
22 IT'S NEEDS TO BE BROKEN INTO INDIVIDUAL PACKAGES,
23 THEN YOU WORRY ABOUT HOW TO GET THAT DONE. THEY
24 DON'T WANT TO BREAK OPEN THEIR PALLETS AND THEIR
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1 DC'S AND HAVE ALL OF THE PROBLEMS OF, YOU KNOW, ONE
2 OF FIVE BEING MISSING AND THE SHIPMENT INTEGRITY
3 ISSUES THAT COME WITH MULTIPLE PIECE LOOSE
4 SHIPMENTS. SO I THINK WE'RE GOING TO BE ABLE TO
5 PUT SOME THINGS TOGETHER IN THAT REGARD. THEY'RE
6 GOING TO BE VERY EXCITING AND THEY'RE GOING TO BE
7 EXACTLY WHAT OUR CUSTOMERS WANT TO SEE FROM THE
8 FED-EX FAMILY OF COMPANIES.
9 JOHN SHERMAN: THANK YOU. ANYONE ELSE?
10 RIGHT HERE.
11 SPEAKER: I'M VICE-PRESIDENT OF
12 HUMAN RESOURCES. AND ACTUALLY THE QUESTION I HAVE
13 IS FROM OUR ASSOCIATES. DUE TO FIELDING SOME CALLS
14 THIS MORNING, THERE SEEMS TO BE A MAJOR QUESTION IN
15 THAT IS FEDEX AFFILIATED WITH A UNION? PRIMARILY,
16 THE TEAMSTERS? AND WHAT DOES IT DO WITH THEIR
17 DESIRE TO REMAIN UNION FREE?
18 FRED SMITH: WELL, FEDEX CORPORATION
19 HAS A VERY SIMILAR CULTURE TO THAT OF AMERICAN
20 FREIGHTWAYS. WE WANT TO TREAT OUR ASSOCIATES AND
21 EMPLOYEES AND CONTRACTORS IN SUCH A WAY THAT THEY
22 DON'T FEEL THAT THEY NEED A THIRD PARTY TO GET
23 IN BETWEEN THEM AND THE MANAGEMENT TEAM IN SERVING
24 CUSTOMER NEEDS. THAT DOESN'T MEAN WE ARE
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1 ANTI-UNION. IT DOESN'T MEAN THAT WE'RE IN ANY WAY
2 AGAINST PEOPLE'S RIGHT TO JOIN A LABOR UNION IF
3 THAT'S WHAT THEY WANT, BUT WE BELIEVE THAT WE
4 SHOULD RUN OUR COMPANY SO THAT PEOPLE DON'T FEEL
5 THAT THEY HAVE TO DO THAT. SO OUR PHILOSOPHIES ARE
6 ABSOLUTELY THE SAME AS AMERICAN FREIGHTWAYS. WE DO
7 NOT HAVE THE TEAMSTERS REPRESENTING ANY FEDEX
8 EMPLOYEES AT THIS POINT. WE DO HAVE THE FEDEX
9 PILOTS ASSOCIATION, WHICH IN NORTH AMERICA IS THE
10 ONLY UNION WITHIN THE FEDEX FAMILY. OFF-SHORE, IN
11 CERTAIN LOCATIONS, THERE ARE UNIONIZED EMPLOYEES
12 AND SOME PLACES BECAUSE IT'S A MATTER OF LAW. BUT
13 THE VAST MAJORITY OF FEDEX EXPRESS EMPLOYEES, ALL
14 OF THE EMPLOYEES IN THE UNITED STATES OTHER THAN
15 THE PILOTS ARE NON-UNION. THE FEDEX GROUND UNIT
16 IS NON-UNION, AND THE PICK-UP AND DELIVERY IS
17 ACTUALLY DONE BY INDEPENDENT CONTRACTORS.
18 JOHN SHERMAN: EXCELLENT QUESTION.
19 GREG SATTERFIELD: I'M VICE-PRESIDENT OF
20 ACCOUNTING. OF COURSE, MANY AF EMPLOYEES ARE ALSO
21 SHAREHOLDERS. AND AS SUCH, THEY WILL HAVE AN
22 OPPORTUNITY TO EITHER RECEIVE CASH OR EXCHANGE
23 THEIR AF SHARES FOR FED-EX SHARES. AND I GUESS I
24 WAS JUST CURIOUS WHAT TYPE OF REACTION DO YOU
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1 EXPECT FROM THIS TRANSACTION IN THE MARKETPLACE?
2 WHAT TYPE OF FEEDBACK MAY YOU HAVE RECIEVED ALREADY
3 FROM THE INVESTMENT COMMUNITY AND FROM ANALYSTS?
4 FRED SMITH: WELL, THIS MORNING, WE HAD
5 A CONFERENCE CALL WITH THE ANALYST COMMUNITY. AND
6 ON THE CONFERENCE CALL, I WAS ON IT, SHERIDAN WAS
7 ON IT, DOUG, TOM AND OUR CHIEF FINANCIAL OFFICER,
8 ALAN GRAF. AND I'LL ASK THEM TO SHARE ANY
9 IMPRESSIONS THAT THEY HAVE, BUT MINE WAS THAT THE
10 FOLKS GOT IT, THEY UNDERSTOOD WHAT WE WERE TRYING
11 TO DO. I THINK PARTICULARLY HELPFUL WAS THE FACT
12 THAT IN ADDITION TO THE CONFERENCE CALL, WE
13 SIMULTANEOUSLY SENT THE INFORMATION OUT ON OUR WEB
14 SITE. AND ON THE WEB SITE, THERE WAS THIS MAP THAT
15 SHOWED THE AMERICAN FREIGHTWAYS SYSTEM IN RED AND
16 THE VIKING SYSTEM IN BLUE. AND, OF COURSE, AS YOU KNOW,
17 THERE'S ONLY A COUPLE OF STATES WHERE THERE'S ANY
18 OVERLAP WHATSOEVER. SO IT INSTANTLY GOT ACROSS TO
19 PEOPLE THAT THIS WAS VERY, VERY COMPLIMENTARY. AND
20 I THINK THEY ALSO UNDERSTAND THE FED-EX COMPETE
21 COLLECTIVELY, OPERATE INDEPENDENTLY STRATEGY AND
22 OUR EFFORTS TO OFFER A BROADER RANGE OF SERVICES TO
23 OUR CUSTOMER BASE. SO THE BEST INDICATION IS THAT
24 AMERICAN FREIGHTWAYS' STOCK TODAY IS, YOU KNOW, UP
<PAGE>
20
1 TEN BUCKS. AND, I THINK, FED-EX CORPORATION IS
2 BASICALLY HANGING IN THERE. IT'S NOT UNUSUAL WHEN
3 A COMPANY ANNOUNCES AN ACQUISITION, QUITE FRANKLY,
4 THAT DUE TO UNCERTAINTY, THAT THE ACQUIRING
5 COMPANY'S STOCK GOES DOWN. AND I DON'T KNOW WHERE
6 FEDEX CORPORATION'S SELLING AT THE MOMENT, BUT I
7 KNOW THAT DURING THE CONFERENCE CALL, AT LEAST, IT
8 DIDN'T APPEAR THAT THERE WAS ANYBODY TRADING A LOT
9 OF STOCK. SHERIDAN, WHAT DID YOU THINK ABOUT THE
10 CALL?
11 SHERMAN GARRISON: I THOUGHT IT WAS A VERY
12 GOOD CALL. I HEARD SEVERAL COMPLIMENTARY REMARKS,
13 AND I'VE HAD SOME SINCE THEN FROM ANALYSTS. AND
14 THEY WERE VERY, VERY MUCH IN FAVOR OF THE
15 COMBINATION OF THE TWO. IT REALLY LOOKS GOOD IN
16 THE INVESTMENT COMMUNITY.
17 FRED SMITH: I THINK ONE OF THE REASONS
18 FOR THAT IS THEY HAVE WATCHED WHAT WE DID WHEN WE
19 ACQUIRED RPS. WE'VE GOTTEN ALL OF THE BENEFITS
20 FROM IT AND THERE HASN'T BEEN ANY CARNAGE AND, YOU
21 KNOW, INTERNAL PROBLEMS THAT HAVE PREOCCUPIED THE
22 MANAGEMENT AND THE INTERNAL TEAMS, SO THERE IS A
23 TRACK RECORD OF DOING WHAT WE'RE DOING. AND THAT,
24 I THINK, HELPS THE CONFIDENCE LEVEL A LOT. THAT'S
<PAGE>
21
1 MY VIEW OF IT.
2 SHERIDAN GARRISON: ONE THING THAT IMPRESSES
3 ME ABOUT FEDEX AND VIKING BOTH IS THEIR SAFETY
4 PROGRAMS. THEY'RE VERY, VERY CONCERNED ABOUT THE
5 WELFARE OF THE PEOPLE THAT WORK IN THEIR COMPANIES
6 AND -- AS WE ARE, TOO, OF COURSE. BUT THEY'RE
7 SAFE OPERATING COMPANIES AND THAT MAKES A TREMENDOUS
8 DIFFERENCE. AND THAT ATTITUDE COMES DOWN FROM THE
9 TOP AND WORKS IT'S WAY ALL THE WAY DOWN AND BACK
10 UP. I'M IMPRESSED BY IT.
11 FRED SMITH: I WOULD JUST ADD TO THAT,
12 JOHN, THE FEDEX CORPORATION MISSION STATEMENT,
13 WHICH IS VERY SHORT, AND WE'LL MAKE SURE THAT IT
14 GETS OUT. IT'S IN OUR LITTLE CORPORATE OPERATING
15 MANUAL. BUT THAT'S RIGHT IN THE CORPORATE MISSION
16 STATEMENT, THAT SAFETY WILL BE THE NUMBER ONE
17 CONSIDERATION IN EVERYTHING THAT WE DO. YOU'VE GOT
18 TO RUN A SAFE AND SECURE OPERATION, THEN YOU CAN
19 WORRY ABOUT EVERYTHING ELSE. BUT THOSE ARE RIGHT
20 AT THE TOP OF THE LIST.
21 JOHN SHERMAN: SPEAKING OF WORDS AND
22 STATEMENTS TO WORK BY AND LIVE BY -- AND TOM
23 REPEATED OUR SIX BUSINESS PRINCIPLES JUST A LITTLE
24 WHILE AGO. TAKE CARE OF OUR CUSTOMERS, TAKE CARE
<PAGE>
22
1 OF OUR PEOPLE, HONOR OUR COMMITMENTS, WORK HARD,
2 WORK SMART, WORK SAFELY, WORK TOGETHER, MAKE THE
3 MOST OF RESOURCES AND HAVE FUN. CULTURALLY, YOU
4 MENTIONED HOW SIMILAR WE ARE. HOW DO THOSE WORDS
5 FIT TO GIVE THESE PEOPLE SOME REAL COMFORT ABOUT
6 BEING PART OF THE FEDEX FAMILY?
7 FRED SMITH: WELL, AS FAR AS HAVING
8 FUN, I MEAN, YOU'VE GOT TO RECOGNIZE THAT ANY
9 COMPANY THAT PUTS A COMMERCIAL ON TELEVISION WITH A
10 CROCODILE MAN, YOU KNOW, HAS GOT TO HAVE A SENSE OF
11 HUMOR AND LIKES TO HAVE FUN. I CAN ASSURE YOU THAT
12 WE PUT A HIGH PREMIUM ON HAVING A LOT OF FUN. I
13 CANNOT TELL YOU HOW SIMILAR THE CORPORATE CULTURES
14 ARE. I MEAN, SHERIDAN AND I HAVE KNOWN EACH OTHER
15 A COUPLE OF YEARS NOW. IT'S LIKE WE'VE KNOWN EACH
16 OTHER FOR 30 YEARS. I'VE KNOWN SOME OF YOUR BOARD
17 MEMBERS FOR YEARS. I'M AN ENORMOUS ADMIRER OF
18 CONGRESSMAN JOHN PAUL HAMMERSCMIDT. I THINK THAT
19 THE VALUES ON PEOPLE ARE NOT JUST BECAUSE SHERIDAN
20 AND I FEEL THAT WAY INDIVIDUALLY, ALTHOUGH WE BOTH
21 DO. IT'S GOOD, HARD-HEADED BUSINESS SENSE IN THE
22 SERVICE INDUSTRY. YOU CANNOT TAKE CARE OF
23 THOUSANDS OR MILLIONS OF DIFFERENT CUSTOMERS WITH
24 THE KIND OF SERVICE EXPECTATIONS THAT PEOPLE HAVE
<PAGE>
23
1 TODAY UNLESS YOU'VE GOT MOTIVATED, COMMITTED
2 EMPLOYEES. SO THE CULTURES ARE THE SAME BECAUSE
3 THEY START AT THE TOP, BUT EQUALLY AND MORE
4 IMPORTANT IN THE YEARS TO COME BECAUSE IT'S CLEAR
5 THAT THAT'S THE SMARTEST WAY TO RUN BUSINESSES LIKE
6 THESE. AND I KNOW HOW DOUG FEELS ABOUT THINGS AND
7 TOM FEELS ABOUT THESE THINGS. AND I THINK THAT THE
8 VALUES THAT TOM ARTICULATED ARE ACTUALLY STATED
9 SOMEWHAT DIFFERENTLY IN THE MISSION STATEMENT OF
10 FED-EX CORPORATION. AND FOR THAT MATTER, ALL OF
11 OUR OTHER OPERATING UNITS AS WELL.
12 SHERIDAN GARRISON: WHEN I THINK ABOUT PEOPLE
13 OF AMERICAN FREIGHTWAYS, I THINK ABOUT JERRY JONES
14 IN ALL OF HIS WISDOM, WHEN WE WERE STARTING OUR
15 COMPANY. ABOUT THE SECOND OR THIRD YEAR AT THE
16 ANNUAL MEETING, HE HAD PICKED THE SPEAKER. AND IT
17 WAS OBVIOUSLY THE WORST SPEAKER I EVER HEARD IN ALL
18 MY LIFE. OBVIOUSLY, HE DID NOT RESEARCH HIM. THIS
19 GUY CAME IN AND HE HAD US ALL DOWN --
20 ABSOLUTELY, WE WERE ALL DOWN LIKE THIS. HE WAS
21 THE WORST MOTIVATOR. IF HE WAS A MOTIVATOR, I
22 DON'T KNOW WHAT. BUT IT WAS THE WORST PERFORMANCE
23 I'VE EVER SEEN. WE GOT TOGETHER AT HALF-TIME, OUR
24 GROUP DID, AND WE SAID, WE'RE GOING TO SEE IF WE CAN CHEER THIS
<PAGE>
24
1 FELLOW UP. AND EVERY TIME HE'D SAY SOMETHING,
2 INSTEAD OF US LOOKING DOWN LIKE HE DID, WE WOULD
3 CHEER. IN A MATTER OF TEN MINUTES, WE HAD HIM
4 BEING TO MOST POSTITIVE SPEAKER YOU EVER HEARD.
5 THIS IS THE KIND OF PEOPLE THAT MAKE UP THIS
6 CORPORATION. WHEN THE GOING GETS TOUGH, WE JUST
7 GET A LITTLE BIT TOUGHER AND WE GRIN AND WE GO
8 AFTER IT. WE HAVE FUN. AND WHEN IT'S ALL OVER
9 WITH, WE'RE STILL ALL FRIENDS AND WE'RE STILL GOING
10 FOR THE FUTURE AND THE LONG TERM. AND WE KNOW WHAT
11 IT'S LIKE TO HAVE FUN AND AT THE SAME TIME, TO
12 BUILD A COMPANY, BUILD PEOPLE UP, GIVE AN
13 OPPORTUNITY TO PEOPLE -- MOST -- I GUESS, FROM WHAT
14 I KNOW, THE MOST GRATIFYING THING ABOUT MY JOB IS
15 TO SEE PEOPLE GROW AS INDIVIDUALS. I'VE SEEN SO
16 MUCH OF THAT IN THIS COMPANY. AND I KNOW THAT WHEN
17 WE GO WITH FED-EX, WE'RE GOING TO SEE THE SAME
18 THING. IT'S GOING TO BE REPEATED ALL OVER AGAIN.
19 AND THAT MEANS A LOT TO ME.
20 FRED SMITH: WE DON'T HAVE ANY PLANS
21 AT THE MOMENT TO DO ANYTHING ON BRANDING. AMERICAN
22 FREIGHTWAYS HAS A GREAT BRAND. VIKING HAS A GREAT
23 BRAND. WE'LL DO A LOT OF CUSTOMER RESEARCH AND
24 MAKE SURE THAT PEOPLE KNOW THAT THERE'S AN
<PAGE>
25
1 AFFILIATION AT THE VERY LEAST. BUT THERE WON'T BE
2 ANYTHING IN THE SHORT RUN ON THAT.
3 FRED SMITH: I MIGHT WANT TO SAY JUST
4 ONE OTHER THING, JOHN. WE TALKED A LITTLE
5 EARLIER -- SHERIDAN DID -- ABOUT THE AMERICAN
6 FREIGHTWAYS RE-ENGINEERING OF THE LINE HAUL SYSTEM
7 WHEN YOU PUT IN THE AMERICAN FLYER SYSTEM. I
8 STUDIED THAT INTENTLY. I HAVE TO TELL YOU, IT WAS
9 ONE OF THE MOST REMARKABLE THINGS I'VE EVER SEEN IN
10 THE HISTORY OF TRANSPORTATION. IT'S THE
11 EQUIVALENT, IN THE TRANSPORTATION INDUSTRY, OF WHAT
12 PATTON DID DURING THE BATTLE OF THE BULGE, TURNING
13 THE WHOLE ARMY AROUND AND GOING UP AND SAVING THE
14 AIRBORNE. IT WAS INCREDIBLE WHAT YOU WERE ABLE
15 TO DO. AND WHEN YOU CAME OUT OF IT, YOUR SYSTEM
16 WAS SO ON POINT WITH WHAT THE CUSTOMERS WANT. AND
17 DOUG DUNCAN AND I TALKED ABOUT THAT ON NUMEROUS
18 OCCASIONS. IT WAS JUST A REAL CREDIT TO THE
19 ORGANIZATION IN TERMS OF YOUR ABILITY TO RECOGNIZE
20 WHAT THE MARKET WANTED AND THEN CHANGE AND TO MEET
21 IT. IT WAS FROM THAT MOMENT FORWARD THAT I TOLD MY
22 TEAMMATES ON THE FEDEX EXCOM, WHICH ARE OUR CHIEF
23 FINANCIAL ADVISOR, ALAN GRAF, AND KEN MASTERSON
24 AND THE HEAD OF MARKETING AND OUR CHIEF INFORMATION
<PAGE>
26
1 OFFICER. THAT'S WHAT WE CALL ARE EXCOM. I
2 SAID THIS IS ONE OF THE GREAT TRANSPORTATION
3 COMPANIES IN THE HISTORY OF THE WORLD AND WE'VE GOT
4 TO SEE IF WE CAN'T FIGURE OUT SOME WAY WE CAN HOOK
5 UP WITH THESE FOLKS. THAT'S WHEN I STARTED, YOU
6 KNOW, COMING TO SEE SHERIDAN AND DEVELOPING A
7 RELATIONSHIP. MY HAT'S OFF TO YOU FOR WHAT YOU'RE
8 ABLE TO DO.
9 JAY KEY: JAY KEY, DIRECTOR OF
10 SAFETY. I HAD A COUPLE OF QUESTIONS THIS MORNING
11 FROM THE HOURLY ASSOCIATES QUESTIONING -- WE HAVE
12 HAD IN THE PAST FOR THEM A STOCK PURCHASE PLAN.
13 AND APPARENTLY THERE WERE SOME THINGS SAID ABOUT
14 THAT. AND THEIR QUESTION WAS, DO YOU FORESEE THAT
15 BEING SOMETHING THAT THE HOURLY ASSOCIATES AT
16 AMERICAN FREIGHTWAYS WILL HAVE, AVAILABILTY OF
17 SOMETHING LIKE THIS IN THE FUTURE?
18 FRED SMITH: WELL, FEDEX CORPORATION
19 HAS AN EMPLOYEE STOCK PURCHASE PLAN TODAY. I DON'T
20 KNOW HOW IT COMPARES WITH AMERICAN FREIGHTWAYS'
21 PLAN. MAYBE IT'S BETTER THAN THE FEDEX PLAN OR
22 WHAT HAVE YOU. I JUST DON'T KNOW. BUT EMPLOYEES
23 WILL BE ABLE TO BUY FEDEX CORPORATION SHARES
24 THROUGH PAYROLL DEDUCTION. AND JUST AS SHERIDAN
<PAGE>
27
1 MENTIONED EARLIER, WE'LL LOOK AT WHAT YOUR PLAN WAS
2 VERSUS WHAT FEDEX CORPORATION AND MAYBE TAKE PARTS
3 OF BOTH ONES. BUT THAT WILL BE PROBABLY BE THE
4 BIGGEST SINGLE CHANGE THAT PEOPLE WILL SEE BECAUSE,
5 AGAIN, THE END OF THE DAY, AMERICAN FREIGHTWAYS'
6 SHARES LISTED SEPARATELY WILL GO AWAY AND THEY'LL
7 BE PART OF THE MUCH BIGGER FEDEX CORPORATION. BUT
8 THERE WILL BE AN EMPLOYEE STOCK PURCHASE PLAN. I
9 JUST CAN'T GIVE YOU THE DETAILS OF IT.
10 JOHN SHERMAN: THANK YOU. ANY OTHER
11 QUESTIONS THAT ANYONE HAD? GOOD QUESTIONS THOUGH.
12 GENTLEMEN, WE REALLY APPRECIATE YOUR TIME TODAY.
13 THIS HAS BEEN A GREAT EXPERIENCE. DO YOU HAVE ANY
14 PARTING WORDS FOR OUR ASSOCIATES HERE? ANYONE?
15 SHERIDAN GARRISON: LET'S GO HAUL FREIGHT.
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24
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 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.
