-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qc7tQDDz7X9UocbNfBxpcjy0Tp9XbmVpFlNukVDDTTAPz9ajzlgpj2zDYB6rULA5 QaqzcpGsF5ZKjFlpYhrWpg== 0000912057-00-001622.txt : 20000202 0000912057-00-001622.hdr.sgml : 20000202 ACCESSION NUMBER: 0000912057-00-001622 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000119 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FDX CORP CENTRAL INDEX KEY: 0001048911 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] IRS NUMBER: 621721435 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-39483 FILM NUMBER: 509424 BUSINESS ADDRESS: STREET 1: 942 SOUTH SHADY GROVE ROAD CITY: MEMPHIS STATE: TN ZIP: 38120- BUSINESS PHONE: 9013693600 MAIL ADDRESS: STREET 1: 6075 POPLAR AVENUE CITY: MEMPHIS STATE: TN ZIP: 38119 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JANUARY 19, 2000 FDX CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) COMMISSION FILE NUMBER 333-39483 DELAWARE 62-1721435 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 942 SOUTH SHADY GROVE ROAD, MEMPHIS, TENNESSEE 38120 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (901) 818-7200 ITEM 5. OTHER EVENTS. On January 19, 2000, FDX Corporation (together with its subsidiaries, the "Company") publicly announced significant new developments in its business xcvstrategy. A copy of the press release, also dated January 19, 2000, is attached hereto as Exhibit 99.1 and incorporated by reference herein. Attached hereto as Exhibit 99.2, and incorporated by reference herein, is a plain-English explanation of the new developments in question and answer ("Q&A") format. Both the press release and the Q&A contain forward-looking statements and information relating to future financial performance or business expectations. The forward-looking statements are subject to a number of specific risks and uncertainties, including those identified below, which could cause actual results to differ materially from historical results or those set forth in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties referred to above include, but are not limited to, the complexities and costs associated with integrating certain sales, marketing and information technology functions into a new subsidiary of the Company; market acceptance of the Company's new FedEx branding strategy as well as the Company's new residential home delivery service; competitive responses to the Company's initiatives; the ability to control package yield, volume growth and costs; U.S. and international economic conditions; technology developments that impact demand for the Company's services; matching aircraft, vehicle and sort capacity additions or deletions to customer volume levels; and regulatory changes. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits
Designation Description ----------- ----------- 99.1 Press Release of FDX Corporation dated January 19, 2000 99.2 Plain-English Explanation of New Developments in Question and Answer Format
[Rest of page intentionally left blank] SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FDX CORPORATION Date: January 19, 2000 By: /s/James S. Hudson --------------------------- James S. Hudson Corporate Vice President - Strategic Financial Planning and Control EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT - ------- ---------------------- 99.1 Press Release of FDX Corporation dated January 19, 2000 99.2 Plain-English Explanation of New Developments in Question and Answer Format
EX-99.1 2 EXHIBIT 99.1 EXHIBIT 99.1 PRESS RELEASE FedEx Unleashes the Power of its Brand INTEGRATES BRANDING, SALES, CUSTOMER SERVICE AND TECHNOLOGY STRATEGIES NEW YORK, N.Y. (JANUARY 19, 2000) - FEDEX CORP. TODAY UNVEILS THREE IMPORTANT STRATEGIC INITIATIVES DESIGNED TO STRENGTHEN ITS COMPETITIVE POSITION AND TO OFFER NEW AND MORE ROBUST SOLUTIONS FOR CUSTOMERS WORLDWIDE: - - A new branding strategy will extend the FedEx brand name to three subsidiaries and to the holding company, previously named FDX Corp. - - Organizational changes planned to take effect over the next few months will provide a convenient single point of access to customers for sales, customer service, billing and automation systems. - - An innovative new low-cost residential delivery service, FedEx Home Delivery, will roll out to many major U.S. markets scheduled in March. "It's time to leverage and extend one of our greatest assets, the FedEx brand, and to provide our customers an integrated set of business solutions," said Frederick W. Smith, chairman, president and CEO of FedEx Corp. "Our customers increasingly want a single company that can meet all of their global transportation needs. Our goal is to provide them a convenient, single point of access to the most powerful collection of express, ground, logistics and supply chain solutions." THE FEDEX BRAND BRANDING CHANGES START AT THE TOP. THE PARENT COMPANY, FORMERLY FDX CORP., WILL BE RENAMED FEDEX CORP., AND SOON ALL OF ITS GLOBAL SUBSIDIARIES WILL OPERATE UNDER THE HIGHLY-RECOGNIZED AND HIGHLY-TRUSTED FEDEX BRAND NAME. - - Federal Express, the worldwide leader in express transportation, will retain its name but modify its logo to FedEx Express; - - RPS, a transportation network that specializes in small-package, ground business-to-business delivery, will be renamed FedEx Ground. FedEx Home Delivery, the new residential delivery service, will be provided through the FedEx Ground network; - - Roberts Express, the leader in the expedited, time-critical delivery sector, will be renamed FedEx Custom Critical; - - FDX Logistics will be renamed FedEx Global Logistics. (EDITORS: PLEASE VISIT WWW.FEDEXCORP.COM FOR SUBSIDIARY LOGOS AND RELATED INFORMATION) "The FedEx brand tells customers worldwide that they can count on us for `absolutely, positively' reliable service and cutting-edge innovation," said T. Michael Glenn, executive vice president of Market Development. "As we re-brand our major subsidiaries, we are making a pledge to our customers that every member of the FedEx family will strive to deliver on the promise of our brand." FedEx Corp. will continue to meet the needs of customers requiring distinct regional services through Viking Freight, the leading less-than-truckload carrier in the western U.S. and airfreight forwarder Caribbean Transportation Services. Both companies will remain part of FedEx Corp. while retaining their individual identities. ORGANIZATIONAL CHANGES While each company will continue to operate independently, completely focused on the distinct needs of various market segments, over the next few months FedEx will provide a single point of access for many customer support functions such as customer service, e-commerce, billing and automation. The sales and marketing organizations will be combined to more effectively sell the entire portfolio of express, ground and logistics services. "These strategic actions are designed to fulfill our two-fold business philosophy - to operate independently yet compete collectively," Smith said. "We strongly believe that the optimal way to serve very distinct market segments, such as express and ground, is to operate highly efficient, independent networks with different facilities, different cut-off times and different delivery commitments. Our collective approach also allows customers to select the right network, for the right place, at the right price through a single point of access." The organizational changes, when fully implemented over time, are expected to yield significant customer benefits - all designed to make it easier to do business with the entire FedEx family. - - One toll-free telephone number (1-800-Go-FedEx) - - One web site at WWW.FEDEX.COM for access to online package tracking and service feature information - - One invoice and account number for express and ground transportation services - - A streamlined customer automation platform to handle electronic transactions for small and large businesses - - Convenient drop-off points for express and ground packages at select FedEx Authorized Ship Centers-Registered Trademark-. FEDEX HOME DELIVERY Beginning in March, FedEx Ground will provide FedEx Home Delivery in many major U.S. markets. This delivery-only service will be dedicated to the needs of businesses specializing in business to consumer e-commerce with unique and compelling low-cost service offerings. This new neighborhood-friendly service is designed to fit the way we live, work and shop today. - - CONVENIENT AND CUSTOMIZED -- FedEx Home Delivery will provide customized delivery options, including delivery by appointment day or evening, with a money-back guarantee; - - UNIQUE AND EFFICIENT -- FedEx Home Delivery will take advantage of the FedEx Ground operational network for pickup and package sorting to maintain a low cost structure. - - DEDICATED TO DELIVERIES -- FedEx Home Delivery will be different than the competition because it will be dedicated to the delivery side of the equation. Hence, it will be able to focus and excel on meeting the distinct customer interface requirements of residential customers. - - A GREAT e-COMMERCE SOLUTION -- This service will complement the FedEx Corporation's leadership position in business-to-business e-commerce market by far the largest and fastest growing segment of e-commerce. FedEx Home Delivery will give "e-tailers" an option that combines reliability with cost-effective ground transportation. WITH ANNUAL REVENUES EXCEEDING $17 BILLION, FEDEX CORP. IS THE PREMIER GLOBAL PROVIDER OF TRANSPORTATION, LOGISTICS, E-COMMERCE AND SUPPLY CHAIN MANAGEMENT SERVICES. THE COMPANY OFFERS INTEGRATED BUSINESS SOLUTIONS THROUGH A NETWORK OF SUBSIDIARIES OPERATING INDEPENDENTLY, INCLUDING: FEDEX EXPRESS, THE WORLD'S LARGEST EXPRESS TRANSPORTATION COMPANY; FEDEX GROUND, NORTH AMERICA'S SECOND LARGEST PROVIDER OF SMALL PACKAGE GROUND DELIVERY SERVICE; FEDEX CUSTOM CRITICAL, THE WORLD'S LARGEST PROVIDER OF EXPEDITED TIME-CRITICAL SHIPMENTS; FEDEX GLOBAL LOGISTICS, AN INTEGRATED LOGISTICS, TECHNOLOGY AND TRANSPORTATION-SOLUTION COMPANY; AND VIKING FREIGHT, A LESS-THAN-TRUCKLOAD CARRIER OPERATING PRINCIPALLY IN THE WESTERN UNITED STATES. MORE THAN A MILLION CUSTOMERS ARE CONNECTED ELECTRONICALLY THROUGH THE FEDEX INFORMATION NETWORK AND APPROXIMATELY TWO-THIRDS OF ITS U.S. DOMESTIC TRANSACTIONS ARE NOW HANDLED ON-LINE. ALL PRESS MATERIALS RELATED TO THIS ANNOUNCEMENT ARE AVAILABLE ON THE WORLD WIDE WEB AT WWW.FEDEXCORP.COM/FDXNEWS/MEDIA/ REPRESENTATIVES OF THE MEDIA ARE INVITED TO PARTICIPATE IN A FEDEX BRIEFING TODAY AT 10:30 A.M. (EST) BY CALLING 800-299-9626. A WEBCAST OF TODAY'S FEDEX CORP. ANALYST MEETING WILL BE AVAILABLE AT WWW.FEDEXCORP.COM AT 12:30 P.M. (EST). FEDEX EXTENDS BRAND AND WILL INTEGRATE CUSTOMER SUPPORT FUNCTIONS Since its operations began, FedEx has been known for unsurpassed customer service. The plan announced today continues that tradition by making it easier than ever for customers to do business with FedEx. The FedEx companies will continue to operate independently but will compete collectively through one, convenient "touch point" for all customers - one simple link to a broad spectrum of transportation and logistics services.
CURRENT SITUATION OUR GOALS - ----------------- --------- Multiple brands under FDX umbrella A single branding system leveraging the power of the FedEx brand so more customers can use FedEx reliability as a strategic competitive advantage Separate sales force with directed A SINGLE, EXPANDED SALES FORCE cooperation ESPECIALLY TARGETING THE SMALL AND MEDIUM-SIZE BUSINESS CROSS-SELLING A WIDE PORTFOLIO OF SERVICES AND PRICING SCHEMES Multiple invoices and account numbers A single invoice and single account number from FedEx Multiple automation platforms offering STREAMLINED CUSTOMER AUTOMATION SYSTEMS all FDX services TO HANDLE ELECTRONIC TRANSACTIONS AND DATABASE MANAGEMENT NEEDS OR SMALL AND LARGE BUSINESSES Separate customer service, claims Single customer service, claims and trace functions trace functions by calling 1-800-Go-FedEx-Registered Trademark- (800-463-3339) or visiting our web site at www.fedex.com.
EX-99.2 3 EXHIBIT 99.2 EXHIBIT 99.2 FDX CORPORATION STRATEGIC RESTRUCTURING JANUARY 19, 2000 Q1. WHAT ARE THE CHANGES BEING ANNOUNCED FOR THE FDX FAMILY OF COMPANIES ON JANUARY 19, 2000? These changes were announced January 19: - - The name of the FDX holding company is changing effective January 19, 2000. The names of the affected subsidiary companies are changing effective February 7, 2000. These name changes will unite the companies under the FedEx brand name. - - FDX Corporation - the holding company - will be re-named FedEx Corporation. - - Federal Express Corporation will not change its name, but will slightly modify its logo to be descriptive of the express services the company provides. Federal Express Corporation will be commonly referred to as FedEx Express. - - RPS, Inc. will be re-named FedEx Ground Package System, Inc. (referred to as FedEx Ground). - - Roberts Express, Inc. will be re-named FedEx Custom Critical, Inc. (referred to as FedEx Custom Critical). - - FDX Logistics will be re-named FedEx Global Logistics, Inc. (referred to as FedEx Logistics). Its FDX Supply Chain Services, Inc. subsidiary will be re-named FedEx Supply Chain Services, Inc. and its Caribbean Transportation Services, Inc. subsidiary will keep its name. Because Viking Freight, Inc. is an established regional brand, and already the leading less-than-truckload carrier in the western United States, we will not change the Viking name as part of this branding effort. - - A new, separate subsidiary called FedEx Corporate Services, Inc., will be formed in June, 2000 by combining the Marketing and Sales groups currently at FDX, Federal Express and RPS. The new subsidiary will also include the Information Technology groups from FDX, Federal Express and RPS who are currently responsible for customer-related systems (the information technology groups currently responsible for operations-related technology will remain with Federal Express and RPS). The new FedEx Corporate Services subsidiary will also include the Electronic Commerce groups currently at FDX and Federal Express. This subsidiary will integrate our marketing, sales and electronic commerce activities to provide our customers with a single point of access to our services. We're making it easier and more convenient for customers to do business with us. - - The customer service and invoicing functions now at RPS will become combined with those same functions at FedEx Express in June, 2000. This is being done to provide customers who use the services of both subsidiaries with one point of contact for these functions. - - The sales and marketing and customer service and invoicing functions at Roberts Express and FDX Logistics will not move to FedEx Corporate Services. The business of Roberts Express and FDX Logistics is different from that of Federal Express and RPS in terms of how their services are sold and supported - requiring that these functions remain at Roberts Express and FDX Logistics. - - RPS announced the implementation of a new service called FedEx Home Delivery. With this new service, we will provide a guaranteed, low-cost solution to the rapidly increasing number of businesses who ship large volumes to residential customers. These customers, in general, want more economical home delivery options. FedEx Home Delivery will be launched in many major U.S. markets in March, 2000. Q2. WHY ARE THE NAMES OF SOME OF THE SUBSIDIARIES CHANGING? FedEx is one of the most trusted and respected brands in the world, and the FedEx brand name is a powerful sales and marketing tool. While RPS and Roberts Express have established excellent reputations in their market segments, bringing them under the FedEx brand umbrella should only accelerate their prospects for growth. For example, research indicates that many customers are not as familiar with the service reliability levels at RPS as they are with FedEx's reputation for reliability. We believe that branding those RPS services with the FedEx name will increase customer awareness for RPS and generate additional business. FDX Logistics is changing its name to FedEx Global Logistics to communicate the fact that the company will provide logistics service to customers all over the world. Viking is not changing its name. As the leading less-than-truckload carrier in the western U.S., the Viking name is very well known and well respected in that regional market. For that reason, it did not make sense to change the name as part of the new FedEx branding strategy. Q3. WHAT WILL BE THE ROLE OF EACH SUBSIDIARY IN THE NEW STRUCTURE? - - FedEx Corporation (currently FDX) - the holding company will provide overall strategic direction to the subsidiary companies. - - FedEx Corporate Services (a new subsidiary) - will sell and market a broad range of services offered by the subsidiary companies, and provide customer-facing technology and electronic commerce solutions that meet customer needs. - - FedEx Express (currently FedEx) - will provide worldwide express transportation services (mostly 1 & 2 day) as FedEx does today. It will also provide customer service and invoicing functions to other subsidiaries on a contract basis. - - FedEx Ground (currently RPS) - will provide business-to-business ground transportation for small packages in the U.S., Canada, Puerto Rico and Mexico as it does today. FedEx Ground will also provide guaranteed, low-cost residential deliveries (beginning March, 2000) to many major U.S. markets serving through the new FedEx Home Delivery service. - - FedEx Custom Critical (currently Roberts Express) - will provide customized, expedited delivery for critical shipments in the U.S., Canada and Europe, just as they do today. - - FedEx Global Logistics (currently FDX Logistics) - will continue to provide contract logistics services, as well as supply chain management and consulting services to customers all over the world. - - Viking Freight (no name change) - will continue to provide the leading-less-than-truckload trucking service in the western U.S., just as it does today. Q4. WHY ARE WE FORMING A NEW SUBSIDIARY? By forming a new subsidiary responsible for sales, marketing, electronic commerce and customer information systems, we can fully integrate those vital activities to make things more convenient and consistent for our customers. We can speak to the customer with one voice, and provide them with a single access point to our services while allowing the operating companies to continue to operate separately and independently. Q5. WILL OUR SERVICE OFFERINGS CHANGE AS A RESULT OF THESE MOVES? Over the next several months we will revise some of our service offerings to ensure that we meet the full range of customer needs and to reduce significant overlaps between subsidiaries. Included in the changes will be a transition of RPS 2 and 3 Day services to FedEx 2 Day and FedEx Express Saver by June 1, 2000. Q6. DOES THIS MEAN WE WILL BE COMBINING THE OPERATIONS OF THE DIFFERENT SUBSIDIARIES? No. WE WILL OPERATE INDEPENDENTLY, BUT COMPETE COLLECTIVELY. Q7. WHY ARE WE KEEPING THE OPERATIONS OF THE VARIOUS SUBSIDIARIES SEPARATE? Each subsidiary serves a separate and distinct segment of the market. Everything about the companies - the operations, the cost structure, the policies and the culture - has been designed to serve the unique customer needs of a particular market segment successfully. Each of the companies is a service leader for its market segment. We believe combining the operations would lower the superior service levels we are now able to provide, and that is something we must avoid. At the same time, while we operate separately, we will compete collectively by combining the functions that are related to customer communication and information. That's where our customers want a single, consistent, convenient point of access. Q8. HOW WILL THESE CHANGES AFFECT OUR OVERALL COMPETITIVE SITUATION? When Federal Express united with Caliber System two years ago, we told customers that we would provide them with a single, convenient point of access to a complete set of services to meet all of their transportation and supply chain management needs. These moves are the next logical steps in this evolutionary process. In the United States, one of the primary tactics used by the company's competitors is to bundle their ground and express services at one packaged price. Since many of our customers use both ground and express services, this tactic can often be effective. Integrating the marketing and sales teams from FedEx Express and FedEx Ground positions us to respond more quickly and effectively to this tactic. As much as possible, our customers want one single point of access to our services. These changes are simply responding to these customer preferences and should strengthen our competitive position in the marketplace. Q9. WHAT WILL BE THE IMPACT OF THE NEW FEDEX BRANDING STRATEGY ON EARNINGS FOR THE CURRENT FISCAL YEAR AND FISCAL YEAR 2001? The January 13 First Call consensus EPS estimates for 3Q'00, 4Q'00, FY'00 and FY'01 are $0.34, $0.79, $2.22 and $2.54, respectively. The Company believes the assumptions leading to these estimates are reasonable. For FY'00, the Company has not given up on its minimum goal of 10% growth in EPS year-to-year. Its reported earnings in fiscal year 1999 were $2.10 per share. Q10. DOES THE COMPANY EXPECT PACKAGE VOLUME AND REVENUE GROWTH AS A RESULT OF THE NEW FEDEX BRANDING STRATEGY? Yes. We believe the strategy will allow us to use the power of the FedEx brand name, provide greater convenience to our customers and integrate our sales and marketing efforts more effectively. As a result, we expect package volume growth to accelerate from current levels. Our current fiscal year 2001 forecast anticipates increased revenue of approximately $400 million over baseline growth rates. By the fourth quarter of fiscal year 2001, we believe that this incremental revenue growth should reach an annualized increase of approximately $700 million. Q11. WILL COMPANY LOGOS OR VEHICLES OR UNIFORMS CHANGE? Yes, in the coming months, logos, vehicle paint schemes and uniforms will change for RPS, Roberts Express and FDX Logistics. We have developed new logos and color schemes to represent FedEx Ground, FedEx Custom Critical and FedEx Global Logistics. FedEx Ground (including FedEx Home Delivery) will have a new purple and green logo. The new logo will replace the logo currently on RPS trucks, vans and uniforms. FedEx Custom Critical will have a new purple and teal-blue logo. The new logo will replace the logo currently on Roberts Express trucks and uniforms. FedEx Global Logistics will have a new purple and magenta logo. The new logo applies to all Logistics' services, including those provided by FedEx Supply Chain Services, Inc. and Caribbean Transportation Services, Inc. (whose name will not change). It is extremely important that our employees, contractors and our vehicles communicate the brand attributes that we're most known for in the marketplace - speed and reliability. For Federal Express, the logo will change, leaving only the word "Express" in the second line. This change will make our logo more descriptive of the express service the company provides. Aircraft and vehicles will NOT be immediately repainted with the modified logo, but we will make the changeover very gradually as new paint jobs are routinely scheduled. Q12. WILL OUR STOCK CONTINUE TO BE TRADED UNDER THE NYSE SYMBOL FDX? Yes, FDX will continue to be the New York Stock Exchange symbol for our stock. Q13. WILL THESE CHANGES AFFECT FEDERAL EXPRESS' INTERNATIONAL REGIONS? These changes will not change the organizational structure of Federal Express' international regions. The sales and marketing organizations in Federal Express' international regions will continue to report primarily to the region with a dual line reporting relationship to FedEx Corporate Services. Overall, however, our improved ability to sell express and ground services in combination in the U.S. should be a powerful tool to generate additional business from multi-national companies. Q14. WILL CUSTOMERS BE ABLE TO CALL 1-800-GO-FEDEX FOR SERVICES FROM ALL OF THE SUBSIDIARIES? 1-800-Go-FEDEX will be the customer service number for FedEx Express, FedEx Ground and FedEx Home Delivery. The customer service representatives at this number will be trained in the services provided by FedEx Custom Critical and FedEx Global Logistics so that calls may be transferred as appropriate. Customers will also be able to call the existing 800 numbers for each of the subsidiaries until those numbers can be retired over time. Q15. WILL WE SEE ANY NEW ADVERTISING AS A RESULT OF THESE CHANGES? Yes. We plan to use advertising at the appropriate time to help make the benefits of these changes apparent to customers. Of course, the best advertising is the words and actions of our customer contact employees and contractors. We will provide our customer contact employees and contractors with information to pass along to customers. Q16. WILL THIS CHANGE THE WAY WE SELL OUR SERVICES? Yes. Once our FDX, Federal Express and RPS sales forces are combined at FedEx Corporate Services, they will sell the broad range of services provided by those companies. We have been selling the combined services of the subsidiaries ever since Federal Express united with Caliber System two years ago, but it's often been a slower, more cumbersome process than we needed. The full integration of the sales forces should make it much easier, much quicker to coordinate our sales activities and offer all of those services as a total, competitively priced package of solutions. Q17. WILL FEDERAL EXPRESS BEGIN USING "OWNER-OPERATORS" SINCE RPS AND ROBERTS EXPRESS USES THEM? No. The owner-operator concept works well at RPS and Roberts Express, and they will continue to use it. There are no plans to implement this concept at Federal Express. Q18. WHY ANNOUNCE THESE CHANGES NOW IF MOST OF THEM ARE SCHEDULED FOR JUNE 1? The strategic re-positioning is an evolutionary process, and we needed to announce the changes now in order to begin working with employees and customers over the next several months to ensure a smooth transition to our new structure. We have a lot of systems work to do to prepare for the implementation of these changes in June. -----END PRIVACY-ENHANCED MESSAGE-----