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Filed by United Parcel Service, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Fritz Companies, Inc
Commission File No.: 0-20548
ON JANUARY 10, 2001, UNITED PARCEL SERVICE, INC. ISSUED THE FOLLOWING PRESS
RELEASE:
FOR IMMEDIATE RELEASE Contacts: Norman Black, Public Relations - UPS
404-828-7593
Kurt Kuehn, Investor Relations - UPS
404-828-6977
Graeme Stewart, Investor Relations - Fritz
415-538-0444
UPS TO ACQUIRE FRITZ COMPANIES, INC.
FOR $450 MILLION IN CLASS B COMMON STOCK
ACQUISITION WILL DRIVE SIGNIFICANT EXPANSION
BY UPS INTO FREIGHT FORWARDING
ATLANTA and SAN FRANCISCO -- Jan. 10, 2001 - UPS (NYSE: UPS) and Fritz
Companies, Inc. (NASDAQ: FRTZ) today jointly announced that UPS has agreed to
acquire Fritz for approximately $450 million in UPS Class B common stock.
Fritz is one of the world's leading freight forwarding, customs
brokerage and logistics concerns, with $1.6 billion in gross revenue in its most
recent fiscal year.
The acquisition will allow UPS to offer a broad, integrated portfolio
of services for moving everything from small packages to heavy freight, by any
mode of transport, anywhere in the world. Freight forwarding, customs brokerage
and logistics customers of Fritz will gain easier access to global supply chain
management, service parts logistics and financial offerings through UPS.
The acquisition is structured as a tax-free, stock-for-stock merger in
which Fritz shareholders will receive UPS Class B common stock in exchange for
their Fritz common stock. Each share of Fritz common stock will be exchanged for
0.200 shares of UPS Class B common stock, for a total issuance of approximately
7.4 million shares of UPS Class B common stock. The transaction is valued at
approximately $450 million based on yesterday's closing price.
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UPS expects to complete the transaction during the second quarter of
2001. It will be the first UPS stock acquisition since UPS's initial public
offering in November 1999. The transaction is subject to customary closing
conditions, including approval by Fritz shareholders and regulatory clearance.
Fritz Chairman and CEO Lynn C. Fritz, who holds approximately 36% of the
outstanding shares of the company, has entered into an agreement to vote the
shares he controls in favor of the merger.
- more -
2-2-2
"This acquisition enhances UPS's strategy by providing comprehensive
solutions across the supply chain at any point our customers desire, moving
goods of any size, by any mode, anywhere in the world," said Joe Pyne, UPS
senior vice president for corporate development. "This expands our flexibility
to offer a broader portfolio of services, including air, ground and ocean
freight, to our global customer base."
Fritz was founded in 1933 and has grown over the past six decades into
a forwarding, customs brokerage and logistics concern with significant
operations in every region of the world. While such firms often go unnoticed by
the general consumer, they play a crucial role in facilitating trade around the
world. Freight forwarders play a key coordination role of arranging for the
movement of goods either by ship, plane, rail or truck on a global basis.
Fritz currently owns and operates 400 facilities in more than 120
countries around the world and has over 10,000 employees globally. In addition
to its forwarding, customs brokerage and logistics services, the company offers
a range of intermodal transfer services, duty drawback options, consulting on
tax, trade and tariff matters, market research and training services.
Fritz reported gross revenues of $1.6 billion and net revenues of
$619.3 million during its latest fiscal year ended May 31. Net income for the
year totaled $17.4 million. Approximately 28% of Fritz's net revenue was
generated from air freight forwarding; 21% from ocean freight forwarding; 30%
from customs brokerage operations, and 21% from logistics services. Fritz's
customers include some of the world's most recognized brands across a broad
range of industries, including mass retailing, computer retail and services,
telecommunications and pharmaceuticals.
"We are very excited about the powerful combination that UPS and Fritz
will create, and I believe the decision to join the UPS team is the best for the
growth and development of this business," said Lynn Fritz. "We have grown into
an industry force over the past 67 years, but we can do even more with UPS's
systems, network and vision of enabling global commerce."
UPS, the world's largest express carrier and largest package delivery
company, already operates in the freight forwarding and customs brokerage arenas
through a
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number of subsidiaries. The acquisition of Fritz signals UPS's intent to expand
that business in order to provide its customers with solutions across the supply
chain.
- more -
3-3-3
The transaction is expected to be non-dilutive to UPS earnings per
share in 2001, as UPS integrates the Fritz operations into its network and
begins to work toward the substantial synergies inherent in this strategic
acquisition. In 2002, UPS expects to achieve modest EPS accretion from the
transaction.
"This will be a powerful combination, offering single accountability to
our customers," said Pyne. "We foresee a tremendous value proposition, offering
a portfolio ranging from small package to air, ocean and ground freight,
logistics, brokerage and financial services."
UPS is the world's largest express carrier and largest package delivery
company, serving more than 200 countries and territories around the world.
Headquartered in Atlanta, Ga., the company is located on the Web at
http://www.ups.com.
# # #
ADVISORIES:
EXECUTIVES OF UPS AND THE FRITZ COMPANIES WILL HOLD AN ANALYST
CONFERENCE CALL TO DISCUSS THIS TRANSACTION AT 1:30 P.M. ON WEDNESDAY, JAN. 10,
2001. THIS CONFERENCE CALL ALSO WILL BE WEBCAST AND CAN BE HEARD AT EITHER
WWW.UPS.COM OR WWW.FRITZ.COM.
ADDITIONAL INFORMATION ON THE TRANSACTION IS AVAILABLE ON THE WEB AT
WWW.UPS.COM, BY CLICKING UPS INVESTOR RELATIONS.
Except for historical information contained herein, the statements made
in this release constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements include statements regarding
the intent, belief or current expectations of UPS and its management regarding
the company's strategic directions, prospects and future results, as well as
statements relating to regulatory approvals required in connection with the
proposed transaction, the prospects and financial condition of the combined
operations of UPS and Fritz, the ability of the parties to successfully
consummate the transaction and integrate the operations of the combined
enterprises and other statements relating to future events and financial
performance. Such forward-looking statements involve certain risks and
uncertainties. Important factors may cause actual results to differ materially
from those contained in forward-looking statements. These include the failure of
the proposed transaction to be completed for any reason, the competitive
environment in which UPS operates, economic and other conditions in the markets
in which UPS operates, strikes, work
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stoppages and slowdowns, governmental regulation, increases in aviation and
motor fuel prices, cyclical and seasonal fluctuations in operating results and
other risks discussed in filings that UPS has made with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for the fiscal
year ended December 31, 1999, which discussions are incorporated herein by
reference.
UPS and Fritz will be filing a joint proxy statement/ prospectus and
other relevant documents concerning the merger with the United States Securities
and Exchange Commission. THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION, AND
WE URGE INVESTORS TO READ THEM. Investors will be able to obtain the documents
free of charge at the SEC's website, www.sec.gov. PLEASE READ THE JOINT PROXY
STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
================================================================================
ON JANUARY 10, 2001, UPS DISTRIBUTED THE FOLLOWING DOCUMENT TO CERTAIN UPS
PERSONNEL TO ASSIST THEM IN ANSWERING QUESTIONS ABOUT THE PROPOSED TRANSACTION
WITH FRITZ COMPANIES, INC.:
Q&A for Fritz Acquisition
01/10/2001 12:58 PM
ORDERED BY QUESTION NUMBER
WHY DID UPS DECIDE TO ACQUIRE FRITZ?
1. The acquisition of Fritz is a continuation of UPS's strategy by adding
another critical component to our participation in the global supply
chain
- One of UPS's strengths is its integrated portfolio of
services. The addition of Fritz will enable UPS to offer an
even broader portfolio of services, which will include freight
forwarding, air, ground, and ocean freight, plus extensive
global brokerage capabilities. The synergies of what UPS and
Fritz, combined, can create will provide an end-to-end supply
chain solution that we believe has tremendous value to
customers.
- This gives UPS added control and flexibility globally.
- These services, when combined with package delivery, UPS
Capital and UPS Logistics Group provide what we believe is an
unparalleled solution for customers.
- This is another step in fulfilling our strategy of building
additional competencies in the integration of goods,
information, and funds.
- In fulfilling this strategy, UPS was looking for a company
with:
- A long reputation for high-quality service
- A brand that is well-known in the industry
- A diverse product portfolio
- Strong operational capabilities
- Global reach
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- Ability to leverage our existing small package and
logistics capabilities
WHAT TYPES OF CHALLENGES WILL THE INTEGRATION OF THESE TWO COMPANIES PRESENT?
HOW ARE YOU GOING TO HANDLE THOSE?
1A. As with any acquisition, there will be issues that have to be
addressed. We already have an integration team in place to manage the
operational and other issues that we know will have to be addressed.
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ARE THERE ANY POTENTIAL ROADBLOCKS TO THE DEAL? WHAT REGULATORY APPROVALS ARE
REQUIRED, IF ANY?
2. We don't anticipate any significant problems. There are several steps
involved. The shareholders of Fritz will have to approve the
transaction and the acquisition is subject to review under
Hart-Scott-Rodino, as well as other, customary regulatory approvals.
The proxy statement/registration statement will be filed with the SEC
and will be mailed to Fritz's shareowners in the near future.
WHO ARE THE SHAREOWNERS OF FRITZ?
3A. Lynn Fritz, the son of the founder, owns about 36 percent of the
outstanding shares and institutional shareowners and others own the
rest.
WHO WILL RUN THE BUSINESS AFTER THE ACQUISITION? WILL LYNN FRITZ STAY ON BOARD?
3. Lynn Fritz will provide his expertise to ensure a successful
integration. His knowledge of the business is critical to the
successful integration and UPS will make extensive use of his
expertise.
David Abney of UPS will head the business unit. Abney has been involved
in the negotiations for the acquisition and comes to this job well
prepared as the former President of SonicAir, UPS's subsidiary that
provides best-flight-out services and services for the movement of
critical parts. His expertise in logistics and in helping customers
with time-sensitive deliveries will play a large role in the success of
the business.
DO YOU ANTICIPATE ANY LAYOFFS OR CLOSINGS OF FACILITIES?
4. It's too early to discuss specific details. Our intent is to utilize
UPS and Fritz's assets to create the highest value to the market and
our customers. Fritz has some of the most knowledgeable employees in
the industry and we intend to rely on their expertise to make the
integration a success and to build this business.
HOW IS THIS GOING TO FIT WITH THE BROKERAGE OPERATIONS UPS ALREADY HAS?
5. Fritz's brokerage capabilities complement UPS's strong small package
brokerage services. This powerful combination will allow UPS to offer a
broader array of brokerage services to our customers, which is
something the marketplace has been demanding.
WILL THIS CHANGE THE CONTRACTS/RELATIONSHIPS UPS HAS WITH FREIGHT FORWARDERS
OTHER THAN FRITZ?
6. There are two aspects of your question. The UPS Airline will continue
to provide capacity to the air freight forwarders who use its airplanes
for lift. The second part is the existing agreements with third-party
freight forwarders. We don't anticipate any immediate changes in our
existing agreements and we'll continue to utilize all the resources
necessary to best serve our customers.
<PAGE> 7
Who are Fritz's largest customers and what benefits will Fritz's customers see
as a result of the merger?
7. UPS and Fritz share a similar customer base, which we believe will make our
integrated services very attractive. Large customers are looking to
maximize the value of their supply chains and we believe that UPS's ability
to provide them single-company capabilities will be unmatched. Those
capabilities will extend beyond small package, logistics and brokerage to
air and ocean freight forwarding. Fritz's customers include some of the
most recognized leaders across a broad range of industries, including
retail, high technology, telecommunications, pharmaceuticals, etc.
WHAT IS THE TIMETABLE FOR THE ACQUISITION? FOR THE INTEGRATION?
8. There are a number of steps in the acquisition, which include getting the
proxy statement mailed to Fritz's shareowners, the Fritz shareowner meeting
and vote, plus customary regulatory reviews and approvals. I cannot give
you an exact date upon which all of this will be completed but in general
we expect to complete the acquisition during the second quarter of 2001.
The integration will be completed as rapidly as possible so that UPS and
Fritz, and their shareowners and customers, can enjoy the benefits of this
acquisition as quickly as possible.
ARE ANY OF FRITZ'S EMPLOYEES UNIONIZED? IF NOT WILL THEY BECOME UNIONIZED?
9. It's our understanding that Fritz is a non-union company.
WILL FRITZ BECOME PART OF THE UPS LOGISTICS GROUP?
10. Although Fritz will work closely with the UPS Logistics Group as well as
our small package customers, it will operate as a separate subsidiary.
UPS IS OFFERING A PREMIUM FOR THE STOCK. WHY IS THAT, ESPECIALLY GIVEN THAT
FRITZ HAS NOT BEEN PERFORMING WELL LATELY?
11. We believe that there are numerous synergies that can be created as a
result of the acquisition by leveraging the customer base of both companies
and enhancing operating effectiveness. Fritz provides a global platform for
air, ocean, and ground freight as well as brokerage services, which
complements our abilities to provide complete supply chain solutions. We
believe that Fritz's recent stock performance is not an accurate indication
of the value that it brings to UPS.
HOW MANY CUSTOMERS DOES FRITZ HAVE AND WHAT ARE ITS ANNUAL REVENUES?
12. Fritz has a large global customer base and gross revenues in excess of
$1.6B. Fritz's customers include some of the most recognized leaders across
a broad range of industries, including retail, high technology,
telecommunications, pharmaceuticals, etc.
<PAGE> 8
IT'S MY UNDERSTANDING THAT FRITZ'S LARGEST BROKERAGE CUSTOMER IS FEDEX. HOW IS
THAT GOING TO AFFECT THIS DEAL?
13. Fritz and FedEx have a contract for Fritz to provide brokerage services for
import shipments into the United States and into selected international
ports. The contract was for seven years and six years of that contract
remain. We are aware that FedEx may be interested in terminating that
contract and we will work with FedEx to come to a mutually satisfactory
agreement.
HOW MUCH IS UPS PAYING FOR FRITZ? WHAT ARE THE TERMS OF THE ACQUISITION? IS
THERE ANY STOCK INVOLVED?
14. See Press Release
WHAT IS FRITZ'S MARKET SHARE? WHAT IS UPS' MARKET SHARE? AND WHAT WILL BE THE
MARKET SHARE OF THE COMBINED COMPANIES?
15. With $1.6 billion in revenue, Fritz is clearly a leader in
transportation, brokerage and logistics. Fritz's market services are
complementary to UPS's. As a rule, we do not release market share
statistics.
WILL THERE BE A TRANSITION TEAM? IF SO, WHAT WILL BE THE MAKEUP OF THAT TEAM?
16. A comprehensive team will be assigned to complete the integration. David
Abney, of UPS, will head the business unit. Abney has been involved in the
negotiations for the acquisition and comes to this job well prepared as the
former President of SonicAir, UPS's subsidiary that provides
best-flight-out services and services for the movement of critical parts.
His expertise in logistics and in helping customers with time-sensitive
deliveries will play a large role in the success of the business.
WHERE ARE FRITZ OFFICES? WHERE ARE UPS'S BROKERAGE OFFICES?
17. Fritz has over 400 offices in 120 countries. UPS Customhouse Brokerage
operates in nearly 80 port locations and 32 countries worldwide. Fritz and
UPS Customhouse Brokerage are two of the largest Customs brokers in the
world.
WILL FRITZ EMPLOYEES SEE CHANGES IN THEIR PAY OR BENEFITS?
18. It's too early to discuss these specifics.
DOES UPS PLAN ON ACQUIRING OTHER BROKERAGES IN THE US OR INTERNATIONALLY?\
19. UPS is always looking to improve its service offerings. Future
acquisitions to further meet our customers supply chain requirements
are constantly being evaluated.
HOW DOES THIS IMPACT YOUR REVENUE TARGETS?
20. See press release
WHICH SEGMENT WILL THIS BE REPORTED IN?
21. This will be a subsidiary included in the non-package segment of UPS
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WILL YOU BE UTILIZING THE UPS SALES FORCE TO SELL FORWARDING SERVICES?
22. Yes. The UPS sales force will be leveraged to identify opportunities
for freight forwarding services. However, since forwarding services are
unique, we also will utilize the freight forwarding expertise of
Fritz's people.
HOW DO FRITZ'S CAPABILITIES COMPARE TO OTHERS SUCH AS DAEI (DANZAS AEI)?
23. Danzas AEI offers similar products as Fritz (air, ocean, logistics,
brokerage and ground.) Fritz also has a superior global IT platform for air
and ocean freight and customer communication. Fritz is a recognized leader
in IT systems within the forwarding industry.
DOES UPS HAVE ANY FORWARDER IT CAPABILITIES? DOES THIS IMPACT THE INTEGRATION OF
THE NEW IT PLATFORM?
24. Fritz's IT platforms, like UPS's, are best-in-breed. In particular, Fritz
has several IT programs for the freight forwarding industry that will be
very nice complements to UPS's IT infrastructure. We are very excited about
the capabilities Fritz will provide.
ARE YOU DOING THIS TO FILL YOUR DOMESTIC OR INTERNATIONAL AIRCRAFT DUE TO
SLOWING VOLUME?
25. No. What's driving this acquisition is that UPS customers have asked
for a broader portfolio of services to fulfill more of their global
supply chain and logistics needs. We believe that the acquisition of
Fritz will significantly enhance our capability for our customers.
IS THIS IN RESPONSE TO DPWN ACQUIRING AEI?
26. No. Our strategy is to enable global commerce and further our ability
to participate in the global supply chain. UPS is always evaluating new
business opportunities and the acquisition of Fritz is a continuation
of our strategy. Unlike the Deutsche Post, UPS has an integrated
network in place.
ARE THERE LARGE OVERLAPS OF UPS CUSTOMERS AND FRITZ CUSTOMERS?
27. UPS has nearly 2 million customers. Certainly there is a shared
customer base and Fritz's forwarding services are an excellent
complement to our small package products.
WILL THIS DEAL BE ACCRETIVE?
27A. See press release
WILL YOU BE CHANGING THE NAME?
28. Fritz will continue to operate under its name for the immediate future.
Long term, no decision has been made yet.
WHY DID YOU NEED THIS ACQUISITION? WHY NOT BUILD?
29. The acquisition of Fritz gives UPS the opportunity to leverage our global
footprint in the freight forwarding and brokerage areas much more quickly.
ARE THERE MORE FORWARDER ACQUISITION OPPORTUNITIES OR IS THE NETWORK COMPLETE?
30. UPS is always looking to improve our service offerings. Future
acquisitions to further meet our customers supply chain requirements
are constantly being evaluated.
<PAGE> 10
YOU ALREADY HAVE A THIRD PARTY BROKERAGE, WHAT HAPPENS TO IT?
31. UPS non-package, or third party, brokerage operation will be integrated
with Fritz's brokerage.
IS THIS A PLAY TO GET MORE SMALL PACKAGE BUSINESS?
32. UPS customers have asked us for a broader portfolio of service to
fulfill more of their global supply chain needs. We believe that this
new addition to our portfolio will continue to enhance our growth
across all segments of our business.
WILL YOU USE FRITZ TO DO UPS SMALL PACKAGE BROKERAGE?
33. UPS will continue to provide brokerage for its small package business
and will leverage the capabilities of Fritz and the UPS Customhouse
Brokerage for the benefit of our customers.
====================================================================
ON JANUARY 10, 2001, UPS DISTRIBUTED THE FOLLOWING MEMORANDUM TO ITS MANAGEMENT,
FOR FURTHER DISTRIBUTION TO EMPLOYEES CONCERNING THE PROPOSED TRANSACTION WITH
FRITZ:
Attached is a press release announcing UPS's agreement to acquire Fritz
Companies, Inc., one of the world's leading freight forwarding, brokerage and
logistics concerns.
At the time of UPS's Initial Public Offering (IPO), UPS indicated that one of
its purposes in conducting the IPO was to be able to use a publicly traded
security to make strategic acquisitions in important markets around the world.
This acquisition is the first time that UPS will use its publicly traded shares
for this purpose. The deal will involve a stock-for-stock merger in which Fritz
shareholders will receive 0.200 shares of UPS Class B common stock in exchange
for each share of Fritz common stock.
The acquisition, which is subject to customary closing conditions and regulatory
approvals, will allow UPS to offer a broad, integrated portfolio for moving
anything from small packages to heavy freight, by any mode of transport, along
with a complete range of logistics services. The acquisition will not affect
current weight limitations within UPS's existing system.
Freight forwarding, brokerage and logistics customers of Fritz will gain easier
access to global supply chain management, service parts logistics and financial
offerings through UPS.
Please post or otherwise make the Press Release available for review by all
UPSers in your area of responsibility.
All UPS employees, management and non-management, should be reminded that they
should not offer public comment, opinion or speculation about the information
contained in the press release. All media inquiries should be directed to
Corporate Public Relations at (404) 828-7123. All inquiries by financial
analysts should be directed to Investor Relations at (404) 828-6059.
<PAGE> 11
SUBJECT: UPS uses stock to acquire Fritz Companies, Inc.
FOR: All Employees
DATE OF USE: January 10, 2001
INTRODUCTION:
For the first time, UPS is using its publicly traded stock to make a strategic
acquisition. In a press release today, UPS said it had agreed to acquire Fritz
Companies, Inc., one of the world's leading freight forwarding, brokerage and
logistics concerns.
KEY POINTS:
- Ability to use publicly traded stock for acquisitions was primary
purpose of IPO
- Acquisition allows UPS customers one-stop option for movement of
packages and heavy freight anywhere around the world
- Enhances UPS's complete range of supply chain services
- Copy of press release is available for your review
CONCLUSION:
As reflected in the UPS Charter, our goal is to continue to be the pre-eminent
global company in our industry. In order to achieve this goal, we will continue
to anticipate changes in global market conditions and position UPS to take
advantage of the opportunities they present.
One of the main purposes of our transformation into a public company was to
allow the use of our publicly traded stock in making strategic acquisitions that
strengthen our position in the global market.
Today's acquisition is the first application of this forward-looking strategy.
<PAGE> 12
ON JANUARY 10, 2001, UPS DISTRIBUTED THE FOLLOWING DOCUMENT TO CERTAIN PERSONNEL
TO ASSIST THEM IN ANSWERING QUESTIONS FROM UPS CUSTOMERS CONCERNING THE PROPOSED
TRANSACTION WITH FRITZ:
CUSTOMER CALL SCRIPT - FINAL
You may have heard an announcement this morning about UPS' plans to acquire
Fritz Companies Inc. It's exciting news for the UPS organization and our
customers, so I wanted to share some specific details with you and answer any
questions you might have.
Fritz is one of the world's leading providers of freight forwarding, logistics
and customs brokerage services. It has a long-standing reputation for
high-quality service and strong, global operational capabilities.
The acquisition of Fritz is an important step in our commitment to provide the
most comprehensive portfolio of global services. It will enable us to better
meet your global needs.
By adding Fritz's services to our own, we believe we can offer you unparalleled
solutions. Specifically, we'll be able to broaden our customs brokerage and
freight forwarding capabilities.
As far as day-to-day operations are concerned, we plan to keep our current
freight forwarder relationships in place. We'll offer Fritz services to
supplement your current offering. Providing you continued high-quality service
is our first priority.
I believe this is a positive step in providing you the services that are vital
to your business. I'll be happy to answer any questions you have.
(If asked, you may acknowledge that although we expect no changes in our current
freight forwarder relationships, we are putting contingency plans in place to
ensure continued service.)
<PAGE> 13
ON JANUARY 10, 2001, UPS DISTRIBUTED THE FOLLOWING DOCUMENT TO EMPLOYEES OF ITS
SUBSIDIARY, UPS LOGISTICS, CONCERNING THE PROPOSED TRANSACTION WITH FRITZ:
January 10, 2001
MEMO TO: UPS Logistics Group Employees
FROM: Dan DiMaggio
RE: Fritz Acquisition
I am pleased to let you know that UPS announced today it has agreed to acquire
Fritz Companies Inc., a leading provider of global freight forwarding, customs
brokerage and logistics services. This marks the first time UPS has used its
publicly traded stock to make a strategic acquisition.
The acquisition of Fritz is another step forward in fulfilling the UPS charge of
enabling global commerce. It will broaden the company's customs brokerage and
freight forwarding capabilities. We believe that these services, combined with
those already offered by the UPS package delivery business, UPS Capital and UPS
Logistics Group, will provide UPS customers unparalleled solutions.
Fritz has a long-standing reputation for high-quality service and a well-known
brand in the industry. Its global reach and strong operational capabilities are
a natural fit within the UPS organization.
With service offerings that complement the capabilities of UPS Logistics Group,
Fritz will work closely with our group upon joining the UPS system. It will
operate as a fellow subsidiary in the non-package segment of UPS.
As reflected in the UPS Charter, our goal is to be the pre-eminent global
company in our industry. In order to achieve this goal, we will continue to
anticipate changes in the global market conditions and position UPS to take
advantage of the opportunities they present.
If you would like to read more about this exciting news, a copy of the press
release is available at http://inside.upslogistics.com.
<PAGE> 14
ON JANUARY 10, 2001, UPS DISTRIBUTED THE FOLLOWING DOCUMENT TO MANAGEMENT
PERSONNEL OF ITS SUBSIDIARY, UPS LOGISTICS, CONCERNING THE PROPOSED TRANSACTION
WITH FRITZ:
January 10, 2001
MEMO TO: UPS Logistics Group Managers
FROM: Dan DiMaggio
RE: Fritz Acquisition
As I'm sure you've heard this morning, UPS has announced plans to acquire Fritz
Companies Inc., a leading provider of global freight forwarding, customs
brokerage and logistics services. This marks the first time UPS has used its
publicly traded stock to make a strategic acquisition.
The acquisition of Fritz is another step forward in fulfilling the UPS charge of
enabling global commerce. It will broaden the company's customs brokerage and
freight forwarding capabilities. We believe that these services, combined with
those of our package delivery business, UPS Capital and UPS Logistics Group,
will provide UPS customers unparalleled solutions.
ABOUT FRITZ
Fritz has a long-standing reputation for high-quality service and a well-known
brand in the industry. Headquartered in San Francisco, Fritz is the largest
customs broker in the United States. It has 10,000 employees located in 400
locations throughout 120 countries. Its global reach and strong operational
capabilities are a natural fit within the UPS organization.
Fritz also brings with it a sophisticated IT system called Global Business
System, or GBS, which provides a full suite of applications for supply chain
visibility. GBS is in the process of being implemented globally.
Although Fritz will work closely with UPS Logistics Group upon joining the UPS
system, it will operate as a separate subsidiary in the non-package segment of
UPS. An integration team, led by David Abney, will ensure a smooth transition
process.
VENDOR IMPACT
<PAGE> 15
Because we currently rely on the freight forwarding services of several vendors
to meet our customers' needs, we highly value those relationships. They are
vital to our role as a carrier-neutral network manager, and our intention is to
continue to honor our current contracts with freight forwarders. Fritz services
will be used to complement the current relationships to meet our customers'
requirements. We plan to contact each of those vendors as soon as possible to
communicate that important message to them.
CUSTOMER IMPACT
We are also contacting key customers by phone today to discuss the acquisition.
We believe this will bring tremendous value to our customers, adding important
capabilities to our overall solutions. Customers have been asking us for the
very capabilities this acquisition will provide, so we expect positive reaction
to this announcement.
Attached for your reference is a Q&A document prepared by UPS. These should help
you answer any questions you may receive about the acquisition.
ON JANUARY 10, 2001, UPS DISTRIBUTED THE FOLLOWING DOCUMENT TO CERTAIN PERSONNEL
CONCERNING THE PROPOSED TRANSACTION WITH FRITZ TO ASSIST THEM IN CONVERSATIONS
WITH UPS VENDORS:
VENDOR CALL SCRIPT
You may have heard already the announcement this morning that UPS plans to
acquire Fritz Companies Inc. In light of that announcement, I wanted to talk
with you one-on-one to discuss the acquisition and any questions you might have.
First, let me emphasize that we value our working relationship with you and
recognize how important your role is in helping us serve our customers. The
services you provide are vital to fulfilling our customers' requirements.
Please know that our intention is to honor our current contracts. We'll call on
Fritz's global capabilities to complement our current relationships to meet our
customers' needs.
Our strategy is to be a network manager, and we will continue to select the best
services for our customers' individual needs.
Just to give you a little more background about the decision to acquire Fritz...
<PAGE> 16
You're probably already familiar with Fritz as a freight forwarder. They also
offer global logistics and customs brokerage capabilities. The acquisition is an
important next step in UPS' strategy of building additional competencies in the
integration of goods, information and funds.
UPS and Fritz will be filing a joint proxy statement/ prospectus and other
relevant documents concerning the merger with the United States Securities and
Exchange Commission. THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION, AND WE
URGE INVESTORS TO READ THEM. Investors will be able to obtain the documents free
of charge at the SEC's website, www.sec.gov. PLEASE READ THE JOINT PROXY
STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
<PAGE> 17
ON JANUARY 10, 2001, UPS PLACED THE FOLLOWING INFORMATION CONCERNING THE
PROPOSED TRANSACTION ON ITS WEB SITE:
================================================================================
UPS / Fritz Acquisition
UPS ACQUISITION OF FRITZ
JANUARY 10, 2001
1/10/01 1
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SAFE HARBOR LANGUAGE
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UPS / Fritz Acquisition
"Except for historical information contained herein, the statements made in this
release constitute forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking statements include statements regarding the intent, belief
or current expectations of UPS and its management regarding the company's
strategic directions, prospects and future results, as well as statements
relating to regulatory approvals required in connection with the proposed
transaction, the prospects and financial condition of the combined operations of
UPS and Fritz, the ability of the parties to successfully consummate the
transaction and integrate the operations of the combined enterprises and other
statements relating to future events and fnancial performance. Such
forward-looking statements involve certain risk and uncertainties. Important
factors may cause actual results to differ materially from those contained in
forward-looking statements. These include the failure of the proposed
transaction to be completed for any reason, the competitive environment in which
UPS operates, economic and other conditions in the markets in which UPS
operates, strikes, work stoppages and slowdowns, governmental regulation,
increases in aviation and motor fuel prices, cyclical and seasonal fluctuations
in operating results and other risks discussed in filings that UPS has made with
the Securities and Exchange Commission, including its Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, which discussions are incorporated
herein by reference."
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CONTENTS
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UPS / Fritz Acquisition
- UPS Strategic Overview
- Transaction Summary
- Fritz Overview
- Transaction Rationale
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UPS'S MISSION IS TO ENABLE GLOBAL COMMERCE BY COMBINING THE MOVEMENT OF GOODS,
INFORMATION, AND FUNDS. OUR GROWTH STRATEGIES FACILITATE THIS MISSION.
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UPS / Fritz Acquisition
UPS GROWTH STRATEGIES
- Expand leadership in core business
- Continue international expansion
- Provide comprehensive logistics and financial solutions
- Leverage technology and e-commerce advantages
- Pursue acquisitions and alliances
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THE ACQUISITION OF FRITZ IS CONSISTENT WITH OUR GROWTH STRATEGIES AND ADDS
ANOTHER CRITICAL COMPONENT TO OUR GLOBAL SUPPLY CHAIN OFFERING
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UPS / Fritz Acquisition
- In response to customer needs, this acquisition gives us the ability to
offer a broader portfolio of products to include air, ground, and ocean
freight
- Strengthens our global brokerage presence
- Allows UPS to offer the total transportation package for the movement
of goods, information, and funds
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FRITZ IS A GOOD FIT WITH UPS -- A KEY PIECE TO THE PUZZLE OF PROVIDING
INTEGRATED SERVICES ACROSS THE SUPPLY CHAIN
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UPS / Fritz Acquisition
UPS Logistics Forwarding
(Fritz & Unistar)
UPS Core
UPS Capital Technology
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[GRAPHIC]
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UPS ACQUISITION OF FRITZ - TRANSACTION SUMMARY
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UPS / Fritz Acquisition
- Transaction Structure: Stock-for-stock merger; fixed exchange ratio
- Transaction Value: Approximately $450 million
- Exchange Ratio: 0.200 shares of UPS Clss B Common stock for each share
of Fritz common stock
- Shares Issued by UPS: Approximately 7.4 million shares of Class B
Common Stock
- Accounting Treatment: Purchase
- EPS Impact: Non-dilutive in 2001, modestly accretive in 2002
- Voting Agreement: Lynn Fritz, who controls approximately 36% of Fritz's
common stock, has agreed to vote in favor of the transaction
- Tax Treatment: Tax-free to Fritz shareholders
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THE TRANSACTION ROADMAP MOVING FORWARD IS ...
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UPS / Fritz Acquisition
- Approval Process
- Review under Hart-Scott-Rodino; other customary regulatory
approvals and closing conditions required
- Fritz shareholder vote required to approve the transaction
- Closing anticipated in the second quarter of 2001
- Fritz becomes a wholly owned subsidiary of UPS
- Reporting to Joe Pyne - Senior VP Corporate Development
- Dave Abney - new business unit manager; will work with Lynn
Fritz during the integration
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FRITZ COMPANIES INC. HAS A PROVEN TRACK RECORD OF PROVIDING QUALITY SERVICE ...
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UPS / Fritz Acquisition
- Headquarters in San Francisco, CA
- Founded in 1933 by Arthur Fritz
- Total Revenue: $1.6 billion (gross); $620 million (net) for the year
ended May 31, 2000
- One of the largest customs brokers and forwarders in the world
- Balanced global footprint
- 10,500 employees in 400 locations in 120 countries
- 9 million square feet of warehouse space
- Attractive, global IT capability
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... AND HAS BALANCED REVENUES ACROSS KEY TERRITORIES AND SERVICES
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FY 2000 NET REVENUE ($619 MM) UPS/Fritz Acquisition
($ in Millions)
<TABLE>
<CAPTION>
TERRITORIES SERVICES
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
United States - $323 - 52.1% Customs Brokerage 30%
Canada - $ 53 - 8.6% Air Freight 28%
Europe - $102 - 16.5% Ocean Freight 21%
China - $ 43 - 6.9% MM&D* 21%
Singapore - $ 11 - 1.8%
Other Asia - $ 48 - 7.7%
Latin America - 6.4%
</TABLE>
Note: Measured as a % of total net revenue
*MM&D - Materials Management & Distribution
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FRITZ OFFERS HIGHLY ATTRACTIVE BROKERAGE AND FORWARDER
CAPABILITIES THAT ARE COMPLEMENTARY TO UPS'S CORE STRENGTHS
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UPS / Fritz Acquisition
<TABLE>
<CAPTION>
FRITZ CAPABILITIES UPS STRENGTHS
-------------------------- ---------------------
<S> <C>
- Global coverage - Management skills
- Diverse and attractive - Expertise in IT
customer base
- Financial strength
- Broad product portfolio
- Core business
- Global Forwarding
Systems - Large base of customers
- Market leadership - Global footprint
- Industry expertise - Premier brand
</TABLE>
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FRITZ'S PLATFORM WILL PROVIDE SIGNIFICANT EXPANSION OPPORTUNITIES
FOR THE UPS NETWORK.
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UPS/Fritz Acquisition
- Revenue opportunities for UPS directed from forwarding into
- UPS Logistics
- UPS Small Package
- Revenue opportunities for the forwarder comes from UPS driving new
business into
- Brokerage
- Forwarding products
- Additional revenue synergies
- UPS Capital
- Air Cargo
- Opportunities due to recent awarding of China air rights
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UPS MANAGEMENT EXPERTISE EXPECTED TO PROVIDE OPERATING
MARGIN IMPROVEMENTS THROUGH ...
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UPS/Fritz Acquisition
- Improving operating efficiencies
- Utilizing excess capacity
- Leveraging IT capabilities
- Integrating brokerage services
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GIVEN THESE BENEFITS, THE COMPLEMENTARY STRATEGIES, AND OVERALL
GROWTH STRATEGIES, UPS EXPECTS TO
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UPS/Fritz Acquisition
- Provide a broader portfolio to our customers
- Create a platform for launching additional new
products
- Grow profitably
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