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FRITZ COMPANIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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<PAGE>
THE FOLLOWING IS A PRESS RELEASE ISSUED BY FRITZ COMPANIES, INC.
ON JANUARY 15, 2001:
Fritz Companies
706 Mission Street, San Francisco, CA 94103, USA
For additional information
Contact: Graeme Stewart
Investor Relations
Tel #: 415.538.0444
FRITZ COMPANIES REPORTS 2ND QUARTER RESULTS FOLLOWING UPS
ANNOUNCEMENT OF DEAL TO ACQUIRE COMPANY
SAN FRANCISCO, January 15, 2001 -- Fritz Companies, Inc. (NASDAQ: FRTZ)
today announced net income of $5.3 million, or 14 cents per share,
during the quarter ended November 30, 2000. This compares to net
income of $9.1 million, or 25 cents per share, in the comparable
period last year.
The quarterly earnings were released following the
company's announcement on January 10 of a definitive agreement with
United Parcel Service Inc. (NYSE:UPS) under which UPS will acquire
Fritz Companies for approximately $450 million in UPS stock. Each
of the roughly 37 million shares of Fritz stock will be exchanged
for 0.200 shares of UPS stock. The financial results for the
quarter ended November 30, 2000, were taken into account by the
parties in their merger negotiations.
"We have grown into an industry force over the past 67
years, but we can do even more with UPS's backing, strength and
vision of enabling global commerce," said Lynn C. Fritz, chairman
and CEO of Fritz Companies. "This union will offer compelling
advantages to all Fritz customers."
During the last quarter, net revenues (which represent
revenues less direct transportation costs) fell by 1.6 percent at
Fritz to $158.2 million, while revenues were $422.1 million, a 1
percent decline from the prior year period.
Revenue performance reflected softness in the company's
domestic business, which continues to be impacted by recent
reorganization actions. Domestic customs brokerage net revenues
fell by 8.7 percent compared to last year, while domestic net
revenues across all products decreased by 6.6 percent. This was in
contrast to the international performance where double-digit net
revenue growth was recorded, on a constant exchange rate basis, in
all of the company's overseas regional operations: Asia grew by
17.9 percent, and Europe and Latin America both achieved growth of
10.8 percent.
Operating expenses of $147.9 million for the quarter were
1.8 percent higher than the prior year period, with labor
productivity of 1.6 percent.
For the six-month period, the company recorded net income
of $11.1 million and earnings per share of 30 cents. For the
six-month period last year, the respective figures were $15.1
million and 41 cents. Revenues of $835.0 million represent a 2.1
percent increase compared to the prior year period; net revenues of
$311.3 million were flat; and operating expenses of $290.6 million
reflect a 1.9 percent increase.
In summary, the company's performance during the quarter was
characterized by weakness in the U.S., but strong activity levels overseas. The
reorganization of the customs brokerage operation has continued to impact the
domestic performance, but steps have been taken to improve productivity and
customer service levels. While the labor productivity during the quarter was
encouraging, general and administrative expenses were adversely affected by
higher demurrage charges and an increase in data processing costs. The company
has seen some early signs of success with respect to its new sales initiatives
and progress has been made with accounts receivable, with a reduction in days
billing outstanding in the U.S. of 5 days since May 31, 2000. At the same time,
investments and advances have been made with respect to the company's systems
initiatives:
o The transportation management module of the company's Global Business
System has been successfully deployed in all countries in Asia, except
Korea;
o The roll-out of customers on the new Purchase Order Management system has
continued; and o The company began testing the first release of its new U.S.
customs brokerage system.
<PAGE>
<TABLE>
The following table provides the revenue, net revenue and percentages
attributable to the company's principal logistics services during
the periods indicated (in thousands, except percentage figures):
<CAPTION>
Three Months Ended November 30, Six Months Ended November 30,
------------------------------- -----------------------------
2000 % 1999 % 2000 % 1999 %
---- - ---- - ---- - ---- -
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Customs brokerage $ 46,228 11.0 $ 49,309 11.6 $ 92,459 11.1 $ 94,902 11.6
Ocean freight forwarding 119,670 28.3 118,451 27.8 243,908 29.2 247,490 30.3
Airfreight forwarding 197,394 46.8 202,813 47.5 381,937 45.7 366,822 44.8
Material management 58,760 13.9 55,930 13.1 116,698 14.0 108,940 13.3
------ ---- ------ ---- ------- ---- ------- ----
and distribution
Total Revenue $ 422,052 100.0 $ 426,503 100.0 $ 835,002 100.0 $ 818,154 100.0
========= ===== ========= ===== ========= ===== ========= =====
Net Revenue:
Customs brokerage $ 46,228 29.2 $ 49,309 30.7 $ 92,459 29.7 $ 94,902 30.5
Ocean freight forwarding 33,680 21.3 31,561 19.6 66,183 21.3 63,833 20.5
Airfreight forwarding 42,826 27.1 45,527 28.3 83,298 26.7 86,131 27.7
Material management and 35,421 22.4 34,327 21.4 69,327 22.3 66,508 21.3
------ ---- ------ ---- - ------ ---- - ------ ----
distribution
Total Net Revenue $ 158,155 100.0 $ 160,724 100.0 $311,267 100.0 $311,374 100.0
========= ===== ========= ===== ======== ===== ======== =====
</TABLE>
<PAGE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<CAPTION>
Three Months Ended November 30, Six Months Ended November 30,
------------------------------ ----------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
$ 422,052 $ 426,503 $ 835,002 $ 818,154
REVENUE
FREIGHT CONSOLIDATION COSTS 263,897 265,779 523,735 506,780
------------- ------------- ------------ -------------
NET REVENUE 158,155 160,724 311,267 311,374
------------- ------------- ------------ -------------
OPERATING EXPENSES
Salaries and related costs 88,580 91,538 175,806 177,972
General and administrative 58,854 53,801 114,334 107,323
Consolidation costs 452 0 452 0
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
Total operating expenses 147,886 145,339 290,592 285,295
------------- ------------- ------------ -------------
10,269 15,385 20,675 26,079
INCOME FROM OPERATIONS
OTHER (EXPENSE) (2,378) (1,968) (4,057) (3,869)
------------- ------------- ------------ -------------
INCOME BEFORE TAX EXPENSE 7,891 13,417 16,618 22,210
INCOME TAX EXPENSE 2,604 4,293 5,484 7,107
------------- ------------- ------------ -------------
NET INCOME $ 5,287 $ 9,124 $ 11,134 $ 15,103
============= ============= ============ =============
Weighted average share outstanding - basic 36,725 36,627 36,655 36,559
============= ============= ============ =============
$ 0.14 $ 0.25 $ 0.30 $ 0.41
Earnings per share - basic
============= ============= ============ =============
Weighted average shares outstanding - diluted 36,841 36,814 37,021 36,771
============= ============= ============ =============
$ 0.14 $ 0.25 $ 0.30 $ 0.41
Earnings per share - diluted
============= ============= ============ =============
</TABLE>
<PAGE>
<TABLE>
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
<CAPTION>
November 30, May 31,
----------- -------
2000 2000
---- ----
ASSETS
<S> <C> <C>
CURRENT ASSETS:
$ 85,889 $ 55,481
Cash and equivalents
Accounts receivable, net of allowance for
doubtful accounts of $19,334 in November,2000, and 485,413 485,679
$19,381 in May, 2000
Deferred income taxes 12,753 14,468
Prepaid expenses and other current assets 17,296 13,132
------------- --------------
Total current assets 601,351 568,760
------------- --------------
108,820 110,208
PROPERTY AND EQUIPMENT, NET
------------- --------------
OTHER ASSETS:
Intangibles, net of accumulated amortization
of $27,160 in November, 2000 and $25,348
in May, 2000 103,451 107,148
Deferred income taxes 30,067 24,903
Other assets 15,150 14,213
------------- --------------
Total other assets 148,668 146,264
------------- --------------
$ 858,839 $ 825,232
TOTAL ASSETS
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations and
short-term borrowings $ 2,359 $ 2,479
Accounts payable 272,484 291,576
Accrued liabilities 116,805 113,370
Income tax payable 14,226 18,089
-------------
--------------
Total current liabilities 405,874 425,514
------------- --------------
LONG-TERM OBLIGATIONS 163,262 116,891
OTHER LIABILITIES 10,222 8,472
------------- --------------
TOTAL LIABILITIES 579,358 550,877
------------- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMITMENTS AND CONTINGENCIES
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Common stock 370 366
Additional paid-in capital 141,015 139,474
Treasury stock, at cost (706) (706)
Retained earnings 172,996 161,862
Accumulated other comprehensive loss (34,194) (26,641)
------------- --------------
Total stockholders' equity 279,481 274,355
------------- --------------
$ 858,839 $ 825,232
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
============= ==============
</TABLE>
<PAGE>
In light of the company's January 10 announcement regarding the
proposed merger transaction with UPS, the company will not host a conference
call to discuss second quarter results.
Fritz Companies, Inc. (NASDAQ: FRTZ) global headquarters is at
706 Mission Street, San Francisco, CA, 94103 USA, tel #: 415.904.8360.
Additional information is available via the Internet: www.fritz.com.
In this press release, the company makes forward-looking statements
that are subject to risks and uncertainties. These forward-looking statements
include information about possible or assumed future results of our operations.
Also, when any of the words "believes", "expects", "anticipates" or similar
expressions are used, the company is making forward-looking statements. Many
possible events or factors could affect the future financial results and
performance of the company. This could cause results or performance to differ
materially from those expressed in the company's forward-looking statements. You
are referred to the company's filings with the Securities and Exchange
Commission for further detail of such risks and uncertainties. In addition, with
respect to the announced merger transaction with UPS, investors should be aware
of the following factors, among others: the possibility that the merger will not
be consummated as a result of failure of the company's stockholders to approve
the merger, or other reasons; the possibility that the merger will be delayed
substantially; the inability to obtain, or meet conditions imposed for,
governmental approvals of the merger; the possibility that the announcement of
the merger transaction will have an adverse impact on the company's business;
and costs relating to the merger. The description of risks and uncertainties is
intended to qualify such forward-looking statements in order to invoke the "safe
harbor" provided by the Private Securities Litigation Reform Act of 1995.
<PAGE>
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger transaction between Fritz
Companies, Inc. and United Parcel Service, Inc. ("UPS"), Fritz Companies and UPS
will file a proxy statement/prospectus with the United States Securities and
Exchange Commission (the "SEC"). STOCKHOLDERS OF FRITZ COMPANIES ARE ADVISED TO
READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION. Stockholders may obtain a free copy of the proxy
statement/prospectus (when available) and other documents filed by Fritz
Companies or UPS with the SEC at the SEC's web site at http://www.sec.gov. Free
copies of the proxy statement/prospectus, once available, and other filings by
Fritz Companies with the SEC may also be obtained by directing a request to
Graeme Stewart, Fritz Investor Relations, Telephone: 415.538.0444.
Fritz Companies and its directors and executive officers may be deemed
to be participants in the solicitation of proxies in respect of the proposed
merger. Information about such directors and executive officers, including
information about their ownership of Fritz Companies stock, can be found in the
Fritz Companies proxy statement, dated August 18, 2000, for its 2000 annual
meeting of stockholders.
CONTACT: Graeme Stewart, Fritz Companies, Inc., Tel #: 415.538.0444
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