425 1 0001.txt Filed by FedEx Corporation Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14d-9 under the Securities Exchange Act of 1934 Subject Company:American Freightways Corporation Commission File No. 000-17570 Date: November 13, 2000 THIS IS A CORRECTED VERSION OF A PREVIOUS FILING. 1 2 3 4 5 6 FedEx Corporation CONFERENCE CALL 7 8 Dated: November 13, 2000 9 10:09 a.m. 10 11 12 13 14 By Amy Klein - Court Reporter 15 16 17 18 19 20 21 22 23 24 25 2 1 2 Good morning, ladies and gentlemen, 3 and welcome to the FedEx Corporation conference 4 call. At this time all participants have been 5 placed on listen only mode and we'll open the 6 floor toward questions and comments toward the 7 end of the presentation. 8 Now at this time it's my pleasure to 9 turn the floor over to today's host Mr. Jim Clippard, 10 Vice President of Investor Relations, FedEx Corporation. 11 MR. CLIPPARD: Thank you very much, 12 Angelo, and welcome, ladies and gentlemen, to the 13 FedEx Corporation conference call. I'm Jim 14 Clippard. As you know this call is to discuss 15 today's announcement that FedEx Corporation has 16 entered into a definitive agreement to acquire 17 American Freightways Corporation, a regional less-than-truckload 18 (LTL) carrier with a strong presence throughout the 19 Midwest, South and Northeast. We issued the 20 press release announcing this agreement today at 21 7 a.m. eastern standard time and it is available 22 on our website at fedex.com and on First Call. 23 This call is also being broadcast over our 24 website and will remain on our site for 25 approximately two weeks. 3 1 2 I want to remind all listeners that 3 FedEx Corporation desires to take advantage of 4 the safe harbor set forth in the Securities Litigation 5 Reform Act. Certain statements made by us during this 6 call may be considered forward looking statements 7 such as statements relating to management's views 8 with respect to future events and financial 9 performance. Forward looking statements are 10 subject to risks, uncertainties and other factors 11 which could cause actual results to differ 12 materially from historical experience or from future 13 results expressed or implied by such forward 14 looking statements. Potential risks and 15 uncertainties include but are not limited to 16 economic and competitive conditions in the 17 markets we serve, matching capacity to value -- 18 inaudible-- corporations and its subsidiaries, press 19 releases and filings with the SEC. We have 20 executives here today who will play key roles 21 in the transaction. After their remarks we 22 will open it up for Q and A. 23 I will now turn the call over to FedEx 24 Corporation Executive Vice President and Chief 25 Financial Officer Alan B. Graf Jr. 4 1 2 Alan? 3 MR. GRAF: Thank you, Jim, and good 4 morning everyone. We certainly appreciate your 5 attendance on this call today. I'm going to lay 6 out a few ground rules about this conference call and 7 then I'm going to highlight the very detailed 8 press release which we issued this morning. 9 The ground rules are we are not going 10 to comment on the current quarter's business 11 activities of either FedEx Corporation or 12 American Freightways other than reiterate to you 13 what we stated in the press release, and I 14 quote "Fedex Corporation and American 15 Freightways stated that they were both 16 comfortable with the First Call consensus 17 earnings estimates for their current quarters" - 18 that would be 64 cents for FedEx Corporation and 19 52 cents for American Freightways. 20 Now the rest of this call is going to 21 be limited to this transaction and I hope you 22 will respect that. 23 The highlights as I see them are as follows: 24 The boards of directors of both companies have 25 unanimously approved a definitive agreement in 5 1 2 which FedEx Corporation will acquire American 3 Freightways Corporation for $28.13 per share or $1.2 billion 4 transaction including assumed debt payable in 5 cash and stock of FedEx Corporation. The 6 acquisition will be structured as a two-step 7 transaction. FedEx Corporation will first make a 8 cash tender offer for up to 50.1 percent of the 9 outstanding shares of American Freightways at a 10 price for $28.13 per share. We expect to file a 11 tender offer later this week or early next week. 12 Once filed, the offer will remain open for a 13 minimum of 22 business days. We expect the offer 14 to be completed in mid December. 15 Following the completion of the tender 16 offer, American Freightways will merge into a 17 newly created subsidiary of FedEx Corporation. 18 American Freightways shareholders who do not 19 tender their shares in the first step will 20 receive FedEx shares in the merger at a value of 21 $28.13 per share. Actual FedEx shares issued 22 will be determined based on 10 days randomly 23 chosen by lot from the 20-day period ending five 24 trading days prior to the closing. I will repeat 25 that. 6 1 2 Actual FedEx shares issued will be 3 determined based on ten days randomly chosen by 4 lot in the 20-day period ending five trading days 5 prior to the closing. 6 A merger is expected to be completed 7 in the first calendar quarter of 2001 and will 8 require approval from the American Freightways 9 shareholders. We are actually targeting a date 10 of March the 1st but there can be no assurances 11 that we will actually meet that date. 12 The transaction will be accounted for 13 on a purchase basis with goodwill amortized over 14 a 40-year period. 15 The merger is subject to approval by 16 American Freightways' stockholders and to a Hart- 17 Scott-Rodino review by the U.S. government. We 18 anticipate receiving HSR clearance prior 19 to the closing of the tender offer. 20 American Freightways founder and 21 Chairman Sheridan Garrison who you will hear from 22 later will become a member of the FedEx 23 Corporation board of directors and will become 24 Chairman Emeritus and remain founder of American 25 Freightways. 7 1 2 Doug Duncan who is the current 3 President and CEO of Viking will become the 4 President and CEO of a new LTL freight group 5 overseeing both Viking and American Freightways. 6 Tom Garrison who you will also hear 7 from later will continue as President and Chief 8 Executive Officer of American Freightways. 9 Tilton Gore who is the current 10 Senior Vice President of Viking will replace Doug 11 Duncan as President and CEO of Viking. 12 This transaction will create the 13 second largest regional less than truckload 14 freight unit in the United States with combined 15 revenues of $1.6 billion. American Freightways 16 has a solid balance sheet, profitable operations 17 and excellent people at every level of their 18 organization. We believe they are a perfect fit 19 for the FedEx Corporation network of companies. 20 We have arranged a $750 million 21 line of credit led by Chase Bank for the cash 22 portion of the transaction and for refinancing American 23 Freightways's debt should we elect to do so. We 24 anticipate using the line to back up the 25 commercial paper which we will issue. We 8 1 2 anticipate our debt rating will be affirmed by 3 Moody's and S&P at Baa2 and BBB, 4 respectively. We have sufficient shares of 5 treasury stock to complete the merger. 6 We anticipate reporting a separate LTL 7 freight group segment in the FedEx Corporation 8 fiscal fourth quarter. 9 10 We have no plans to merge Viking and 11 American Freightways but we do plan to explore 12 all opportunities for synergies. For example, 13 business that previously went to competitors can 14 now stay in the family. 15 While I'm not going to forecast 16 specific financial numbers I will tell you that 17 we expect this deal to be accretive in FedEx's earnings 18 immediately. In summary, this is a fabulous transaction 19 for employees, customers and stockholders. We are all 20 extremely excited about it and we are confident 21 it will be approved. 22 FedEx Chairman Fred Smith is here with 23 us this morning and I would like to turn it over 24 to him to give you the strategic overview of the 25 transaction. 9 1 2 MR. SMITH: Thank you, Alan. As you 3 said, we believe this pending acquisition is 4 great news for stockholders, customers and 5 employees of both companies. It's a great fit 6 geographically. Matching Vikings' Western U.S. 7 leadership with American Freightways strong 8 presence throughout the Midwest, South and 9 Northeast. It's a great fit for our customers 10 with a broadened FedEx portfolio of services 11 which is unmatched by any competitor. It's a 12 great fit culturally as American Freightways 13 associates like all FedEx people are absolutely 14 positively dedicated to providing the most 15 reliable service available to our customers. I 16 should note that we will continue our "operate 17 independently, compete collectively" strategy and 18 this acquisition follows our corporate objective 19 of growing our logistics and freight businesses. 20 Outside industry observers believe 21 that the regional LTL market will grow by nearly 22 10 percent per year in terms of revenue over the 23 next five years. 24 I'm particularly pleased to have 25 Sheridan Garrison on the call with us this 10 1 2 morning. Sheridan's a gentleman whom I've come 3 to know and admire greatly. He will have a 4 critical role in the future direction of our 5 companies as he will be joining us on the FedEx 6 Corporation board of directors and, as Alan 7 mentioned, he will serve as the Chairman Emeritus 8 and founder of American Freightways. Sheridan, I 9 turn it over to you. 10 MR. GARRISON: Okay, Fred. Thank 11 you. I appreciate your comments and let me 12 assure you that the admiration is mutual. 13 This is indeed an exciting time for 14 the American team. For quite some time Fred and 15 I drifted back and forth about the benefits that 16 would result from this combination, benefits for 17 customers, associates and shareholders. Very rarely 18 does one see a combination of winners such as 19 we have here. We share many traits, key to all this is 20 our commitment to our customers and our commitment to our 21 people. I look forward to being part of this new 22 dynamic organization. We will be busy but we'll 23 have a lot of fun. We also have Tom Garrison on 24 the call and he will further expand on the 25 benefits of this combination before Jim opens it 11 1 2 up for questions. Tom? 3 MR. TOM GARRISON: thank you -- 4 I am very excited by this transaction. It's going 5 to be a lot of fun. It's going to be a challenge, it's going 6 to be a lot of work and it's going to be very 7 rewarding outside what we're going to do for our 8 customers and for our associates. It really couldn't 9 come at a better time because we're exploring how 10 we're going to open on the West Coast. The Viking 11 and AF service territories match up perfectly, almost like 12 two pieces of a puzzle. Both AF and Viking have built strong 13 LTL networks in their respective markets, focusing on the 14 next day business and second day interregional business and 15 each delivers outstanding customer satisfaction by providing 16 rapid delivery times, broad coverage areas and 17 courteous friendly service. For our customers 18 this combination will allow us to offer West Coast 19 regional service for less (inaudible), so our employees inclusion 20 in the FedEx family will offer significant opportunities 21 as we combine strengths and produce incremental 22 profit growth. Jim? 23 MR. CLIPPARD: Thank you, Tom. We are 24 now ready for the first question. Please 25 remember to limit your questions to those of a 12 1 2 strategic nature concerning this transaction. 3 We'll refer all questions for this quarter's operations until 4 the second quarter conference call on 5 December the 20th. 6 Angelo, if you would start the 7 question process. 8 ANGELO: Thank you, sir. The floor is 9 now open for questions. If you have a question or a comment at this 10 time, please press the number one followed by four on your touchtone 11 phone. Now if at any point your question is answered you can remove 12 yourself from the queue by pressing the pound(#) key. And finally we do 13 ask that while you pose your question that you pick up your handset if 14 using your speaker phone for sound quality purposes. Please hold 15 while we poll for questions. Our first question is coming 16 from Jordan Alliger of Goldman Sachs. Sir, please state your question. 17 Q. Hi, I guess one question is after this 18 transaction goes through, will you envision 19 additional possibilities for expansion or would 20 you view the network as largely complete from a 21 strategic standpoint? 22 A. Well, I think this pretty well covers 23 the country. American Freightways has all points 24 services and in all of the states that they serve 25 and Viking of course has the market leadership 26 position in the western states. I think there 27 are only two states that the two companies don't 28 serve directly. They serve it through an 29 affiliate service that's Montana and Wyoming. So 30 I don't know that there's much need for anything 13 1 2 other than managing the businesses. 3 Q. Just a follow-up. Although it was 4 mentioned accretive, I don't know if you can give 5 any sense for the type of accretion you guys are 6 considering whether it be a range or what have 7 you and when the timing will come in? I guess it would 8 be contingent when the deal will close. Again 9 your thoughts on that. 10 A. Jordan, it's Alan. It probably will likely 11 not be material accretion in fiscal 01 if we go according 12 to the calendar January and February consolidated 13 with a minority interest and then we'll have the 14 fourth quarter where we'll have the full 15 consolidation but thereafter I would expect the 16 accretion to be in the 3 to 5 percent range. 17 Q. Thank you. 18 ANGELO: Thank you. Our next question 19 is coming from Doug Rockel of ING Barings 20 Bergs. State your questions. 21 Q. Thank you. Federal is regarded as an airline 22 when it comes to labor negotiations and most trucking 23 companies are governed under the National Labor Relations Act (NLRA). 24 What effects will this transaction have in terms of your labor status? 25 14 1 2 A. This is Fred Smith speaking. FedEx 3 Corporation owns five major operating units 4 including FedEx Ground, FedEx Custom Critical and 5 FedEx Express. The new freight unit and FedEx 6 Ground are governed by the National Labor 7 Relations Act. FedEx Express is an integrated 8 air-ground express company, and an air carrier is 9 regulated by the Railway Labor Act. Nothing 10 in this transaction should affect those issues. 11 The companies are managed independently. The 12 corporation through its services subsidiary 13 provides information and telecommunications 14 services and certain major corporate sales 15 activities, but the companies operate 16 independently reporting in to our strategic 17 management committee and our executive 18 committee. That's how we "compete collectively 19 but operate independently" strategy, and we think 20 it's a terrific strategy. 21 ANGELO: Thank you. Our next question 22 is coming from Gary Yablon of Credit Suisse First 23 Boston. Please state your question. 24 Q. I just wanted to know if you could 25 talk strategically about the opportunities for 15 1 2 the much expanded ground product to work with, -- 3 maybe not necessarily integrate -- but work with 4 the air product and move more product on the 5 ground over time or things of that nature; is 6 there something about this where there's some 7 efficiency on that score going forward? 8 A. Gary, this is Fred Smith speaking. A 9 big part of the operate independently-compete collectively 10 strategy is a fundamental recognition that there 11 are distinct market segments in the transport and 12 logistics business. I feel very strongly after, 13 you know, almost three decades in this business 14 that if you try to serve too many market segments 15 with the same operating unit you sub-optimize 16 either service levels or you increase your 17 costs. 18 The requirement to move freight, 19 palletized freight, more and more on a regional 20 or an interregional basis is a distinct market 21 segment. The express business requires a 22 different set of operating disciplines and assets 23 and so forth. Now our express company also 24 carries freight, but it carries freight that goes 25 in generally trucks and planes going long 16 1 2 distances, including internationally. That's not 3 the case with our LTL companies and so I think 4 the overlap will be small. 5 Now having said that, I think that 6 there are tremendous opportunities to cross-sell 7 a portfolio of services to our customers. And 8 there are significant opportunities but it 9 is mostly on the revenue side and not on any sort 10 of operational synergies. 11 There will be opportunities for Viking 12 and American to generate new business between the 13 two companies. That I'm sure of. 14 Q. Okay, thank you. 15 ANGELO: Thank you. Our next question 16 is coming from Jon Jacobson of Highfield 17 Capital. Sir, please state your question or 18 comment. 19 Q. Hi, good morning. Have the Garrisons 20 indicated whether or not they are going to tender 21 their shares into the tender offer and if so or 22 not what happens if less than 50 percent of the 23 shares are tendered into the tender offer, then 24 what happens? 25 A. We have a voting agreement with the 17 1 2 Garrisons that allows them to tender up to 1 3 million shares into the tender offer at their 4 discretion. An additional 2.2 million shares if 5 we do not reach the 50.1. FedEx Corporation also 6 has the right to extend or waive the 50.1 percent 7 requirement if it's not met. However we 8 anticipate that not being an issue. 9 Q. Thank you. 10 ANGELO: Thank you. Our next question 11 is coming from Helane Baker of Buckingham Research. 12 Q. Thank you very much operator. Just a 13 question about American Freightways and FedEx 14 now. How much of the freight that AF carries is 15 already FedEx freight? 16 A. I would say a de minimis amount. 17 Q. Okay, so then the opportunity to move 18 freight off of owner operators your other 19 independents to move on to AF should improve 20 the margins on a going forward basis, I would 21 think? 22 A. Certainly, Helane, we're going to 23 explore every possibility. However the number I 24 gave you on accretion of 3 to 5 percent is 25 dependent on no synergies. To the extent that we 18 1 2 can find things to keep it in the family 3 absolutely we will do so. But as Fred said, this 4 is much more of a portfolio broadening play where 5 we anticipate that we will also generate 6 additional packages for our Express and Ground 7 networks by being able to offer a much broader 8 LTL service. 9 Q. Okay. Okay. That seems to make 10 sense. So in terms of -- will then -- will their 11 volume start to go through your system? Is that 12 what you're saying? 13 A. No. 14 Q. Okay. 15 A. Absolutely not. But on a broadened 16 portfolio selling basis, we now no longer have an 17 artificial 150 pound restriction for ground 18 movement. 19 Q. Oh, okay. 20 A. We only had it on the West Coast. We 21 now added the rest of the United States and I can 22 tell you that has been very powerful at Viking where we 23 have been able to cross-sell and generate package 24 volume as a result of being able to have that LTL service in 25 the west and we anticipate we will expand 19 1 2 that nationwide just as fast as we possibly can. 3 Q. Two other brief questions. Does their 4 customer base in any way overlap your customer 5 base? 6 A. I think to a small degree. But 7 remember at Express that freight business at 8 Express is time definite. Whether it be F1, F2, 9 F3. In the case of F1 you know it's ten times 10 the revenue per pound because is basically moved 11 overnight, point to point, it's required to be 12 palletized, it has weight limits on it so it is 13 for a very specific, very high end part of the 14 market. There may be some overlap with FedEx 15 Express' F3 traffic but again I don't think that 16 to be very great and I actually believe that by 17 being able to offer now nationwide LTL service we 18 will actually generate more express freight for 19 FedEx Express as the opportunity has now been 20 able to be sold by the American Freightways' team. 21 Q. Okay. Then my last question is, does 22 this in any way take away from your negotiations 23 with the postal service? 24 A. All I will say about the postal service is 25 that we continue to hold discussions with them. 20 1 2 Q. Okay, all right, well, congratulations on 3 what looks like an interesting transaction. 4 Thanks, Alan. 5 ANGELO: Thank you. Our next question 6 is coming from Tom Alback of BB&T Capital 7 Markets. Please state your question or comment. 8 Q. Thank you. You know in terms of the 9 cross selling opportunities, do you have a 10 timetable at which the sales force will begin to 11 be crossed or trained in selling American 12 Freightways' capabilities? I mean as we look 13 back at what happened with the old RPS and now 14 FedEx Ground there's about a two and a half year 15 lag between when you acquired the companies and really 16 began to focus on the cross-selling. 17 A. We intend to move very rapidly into 18 this. I believe that in this particular instance 19 the training will not have to be nearly as 20 intense because the entire FedEx services sales 21 force is already selling freight. This just 22 gives them another arrow in the quiver, if you 23 will, to be able to offer a more day-definite 24 ground service lower cost but highly reliable movement. 25 Fred, you want to add to that? 21 1 2 MR. SMITH: Well, I was going to say 3 Viking and American Freightways will continue to 4 maintain their own sales force and our services 5 company sales force that sells both Express and 6 Ground will be able to refer companies 7 who need this type of outstanding regional LTL 8 service to our LTL freight specialist in American 9 or Viking. 10 I think there is probably more 11 opportunity in the short and intermediate term 12 and by that I mean in the next couple of years to 13 cross-sell at the large company level, where we 14 will probably have a single account 15 representative at the very largest companies. 16 But I want to emphasize that American and Viking 17 and our LTL unit will maintain their sales forces 18 separately. 19 Q. Okay. So then at some point would 20 American Freightways salespeople be cross-trained 21 to sell the other FedEx products I guess would be 22 a good question? 23 A. I think the way that it's best put is 24 that the Express and Ground package sales force 25 will be able to refer our customers who require 22 1 2 regional LTL service to the freight specialist 3 and vice versa. 4 The selling of LTL is a highly 5 specialized business. The business has a lot of 6 peculiarities and esoteric aspects to it, and we do 7 not intend to have a single sales force selling 8 both Ground and Express and LTL. They will be 9 able to refer as sister companies an 10 account that needs both services. 11 Now, for the very largest accounts we 12 probably will have a single representative for 13 FedEx Corporation dealing with that company. But 14 he or she can then avail themselves of Express or 15 Ground or LTL freight specialists to be able to 16 serve that account's needs. Have I been clear? 17 Q. Yeah. Somewhat. I guess as a 18 follow-up on the F1, F2, F3 you talked about the 19 time definite nature there, but it would seem that 20 that would be one opportunity that would avail 21 itself to put some of that freight into the 22 American Freightways system. I don't think I 23 heard you exactly talk about that opportunity. 24 You talked more about the differences. But am I 25 incorrect in making that assumption that some of 23 1 2 that freight couldn't go to the American 3 Freightways system? 4 A. Yes, you're incorrect in that 5 assumption. The F1 product that FedEx Express 6 serves in the main is a long distance movement 7 which requires transportation by air to get it to 8 its destination within the committed time frame. 9 Now there is a very small amount of that where 10 there is an overlap. However, the Express pickup 11 cycle is generally very late in the evening or 12 relatively late depending on what part of the 13 country you're in, and early morning deliveries. 14 And that is not the same pickup and delivery 15 cycle as the LTL business and obviously it is 16 impossible to move a freight shipment from San 17 Jose, California to Charlotte, North Carolina 18 overnight in a truck. So there is very, very 19 little overlap in the F1 sector. 20 There may be a bit more in the F2 and 21 as Alan mentioned in the F3. However, again, I 22 want to caution you that the freight segments are 23 distinct. The express freight shipper has a 24 distinct set of requirements and the regional LTL 25 shipper has a distinct set of requirements and 24 1 2 there is relatively small overlap there. 3 We have experienced this with Viking 4 for the last almost three years now. We've seen 5 very little overlap. I should tell you that 6 American Freightways does about 46,000 shipments 7 a day, Viking's at about 13,500 and FedEx Express 8 is at about 10,000. That should give you an 9 order of magnitude of the relative size of these 10 things, and again as Fred says, because of the 11 later pickups, earlier deliveries and time 12 definition of express, those yields are 13 substantially higher than at Viking or American 14 Freightways and the market there is probably 15 since it's limited to the high end not nearly as 16 big. 17 Q. Thank you. 18 ANGELO: Thank you. Our next question 19 is coming from Jeff Kauffman of Merrill Lynch. 20 Sir, please state your question or comment. 21 Q. Okay, thank you very much. Just a 22 quick note to Sheridan, Tom, Fred, Alan. 23 Congratulations to all your respective 24 organizations. This appears to be a very solid 25 fit across the board here. 25 1 2 Kind of the same question for both 3 companies here. 4 First to FedEx. Obviously, the 5 experiment at Viking went very well. The results 6 were better than I think you'd expected when you 7 started out and we decided we like that 8 business. 9 Can you talk about some of the factors 10 that have strategically driven you to decide to 11 make LTL a bigger part of the FedEx portfolio? 12 And I guess following up on that a similar 13 question to Tom or Sheridan would be now that you 14 have this big financial powerhouse of FedEx and 15 this fantastic brand name backing your product 16 that was already good, what strategically do you 17 see changing for the carrier going forward? 18 A. This is Alan. I'll start out. I mean 19 obviously the broadening of the portfolio and 20 being the only company who offers this we think 21 is a huge opportunity. Doug Duncan who is here 22 and can take us a little bit further than me has 23 done a fabulous job at Viking and we have been 24 listening to our customers out there who have 25 been telling us, look, we need you to take 26 1 2 packages and shipments that weigh more than 150 3 pounds and we need inside deliveries, we need 4 tracking and tracing, we need all the bells and 5 whistles that we get from your express package business. 6 Doug has been providing this. And he's been 7 improving the service, improving the number of 8 scans in information availability while he's been 9 improving the operating ratios. That's what got 10 us really excited about it. As we talk to more and 11 more customers who operate in all parts of the 12 country and they said, gee, we'd really like you to do this east of 13 the Rockies, you do a great job for us west of the Rockies 14 but we're forced to use other carriers elsewhere and as we looked 15 we began to study all the opportunities very carefully. We fell in 16 love with American Freightways. It's obviously a 17 natural perfect geographic fit. The cultures 18 are exactly a perfect fit and I think Sheridan can 19 elaborate on that. We pass it over to Doug just 20 to give you a little bit what he's experienced on 21 the West Coast for the last couple of years. 22 MR. DUNCAN: I think the freight 23 market, the LTL freight market, has really grown 24 rapidly speed requirements to the customer. 25 I think that refers to the change in inventory 27 1 2 requirements and the speeding up of the supply 3 chain, so regional transportation is growing 4 rapidly in the freight market and I think that is 5 a part of the business that we need to be in. 6 We've done it in the west and American 7 Freightways has done it in the other parts of 8 the country and that will continue to be our 9 focus on the regional, next and second day 10 transportation to meet the growing supply chain need. 11 Doug, if I interpreted Alan's comments 12 correctly this isn't just FedEx getting involved in the 13 LTL business. This is raising the bar in that 14 business. You're talking about raising yields, 15 raising technology. This isn't just being a 16 trucking company? 17 A. Well, I think AF -- the combination of 18 AF and Viking is a combination of the two best 19 service companies in this business. 20 Q. Uh-hum. 21 A. And it's now going to be affiliated 22 with FedEx and we will begin to integrate those. 23 We offer customer solutions all through the 24 supply chain. 25 Q. Can I get a quick response from 28 1 2 Sheridan or Tom just on whether or not you see 3 this kind of changing the core strategy that you 4 have embarked on in the last few years? 5 A. This is Sheridan, I'm sorry, I don't 6 think this will change the core strategy. In a 7 sense all along we made this a central serving 8 point or benefit to the customer that we serve 9 all points direct. What this does for us, 10 though, when we're out in the boonies -- which 11 we promise to do -- we are out in the boonies 12 we're able to offer a particular customer a 13 broader service array in terms of all points to 14 48 states in combination with Viking. So we 15 will have something there which we 16 never had before, go to a company to serve those 17 48 states. This will work great for us. 18 We operate in this fashion. We give 19 service on intrastate, regional, interregional 20 and long hall or national -- this simply allows us to 21 fill that basic service out. It's not really a 22 change. Just an addition to what we can do. 23 Jeff, let me just add one thing. It's 24 obviously our intention to use the great technology 25 that we already have at FedEx Express and FedEx Ground 29 1 2 and exploit what we've already developed 3 with our LTL group and over time you're going to 4 see a lot more information intensity about LTL 5 movements, you're going to see capabilities over 6 time about SKU levels in those shipments when 7 they arrive, much better inventory management. 8 So absolutely we're going to take the lead that 9 we have and expand it from an IT standpoint. 10 Q. Very well. Well, thank you all and 11 best of luck. 12 ANGELO: Our next question is coming 13 from James Valentine of Morgan Stanley Dean Witter. 14 Q. The only question I have is with 15 regional LTL carriers that can't cover an entire 16 country, they tend to have very strong 17 relationships with one or two partners in those geographic 18 regions they don't reach. Can you tell us, was 19 Viking and American Freightways, were they already 20 the number one and number two partner in the 21 other's respective regions and if not can you maybe 22 tell us who the one or two were? 23 A. I can tell you -- this is 24 Sheridan -- from our standpoint and of course we 25 did very, very little business with Viking, we 30 1 2 have a policy of not doing interline business in 3 the domestic country, the United States, so that 4 we would have almost no exchange of traffic at 5 this time with Viking. But then, actually, it will 6 change substantially. 7 MR. DUNCAN: This is Doug Duncan. We 8 did have a relationship with Overnite 9 Transportation in the eastern part of the country 10 to serve those customers that wanted to use us as 11 a single source and of course that business as 12 the transaction becomes complete will come over 13 to American and I feel certain we will be able to 14 expand that. 15 Q. Do you have any idea, a ballpark 16 range, in size, $200 million, $500 million? 17 A. I really don't have that with me. 18 Q. Okay. Thanks. 19 ANGELO: Thank you. Our next question 20 is coming from Edward Wolfe of Bear Stearns. 21 Q. Yeah, good morning, guys. Alan before 22 somebody asked the question about tender you know 23 what happens if you don't get the required tender 24 numbers you said, I just want some clarification, 25 that the Garrisons have agreed to sell a million 31 1 2 shares at their discretion into the tender and 3 then you said if you don't get the 50 percent 4 then they can do up to 2.2. Is it at the 5 Garrisons' discretion at that point or does that 6 become mandatory? 7 A. I'll go there again, Ed. The 8 Garrisons have at their discretion the right to 9 tender up to a million shares in the cash 10 tender. They also have the right at their 11 discretion to tender an additional 2.2 million 12 shares should we not achieve the 50.1 percent by 13 mid December. 14 Q. So it's at the Garrisons' discretion? 15 A. That second piece is at our option. 16 Q. At FedEx? 17 A. Yes, sir. 18 Q. Are there any other breakup fees or 19 anything like that? 20 A. There is a breakup fee. 21 Q. Do you care to elaborate on that? 22 Ballpark? And is it for both companies, the 23 breakup? 24 A. That's a one way breakup fee for the FedEx 25 Corporation of about $33 million. 32 1 2 Q. Okay. I'm looking at what you have on 3 the website which looks a lot like the electoral 4 votes with the election campaign. The red and 5 blue where American Freightways is and where Viking is, 6 where areas are served, where areas are not served and it's obviously 7 a very good end-to-end merger. That being said there are some 8 states where you overlap. There are some states 9 where neither of you are now. What's the plan 10 going forward in terms of branding in terms if 11 you're not going to integrate the two businesses 12 and where? 13 A. This is Doug Duncan. I would like to 14 respond to that. A couple of things, number one 15 the brands will continue, we're blessed with 16 three very, very strong brand names here with 17 American and its market, Viking and all now under 18 FedEx which I think we can make that an extremely 19 positive combination. We do have some areas 20 where we overlap and we will take the time to 21 figure that out and figure out what's best to 22 serve the customers in those markets, but the 23 nice thing is we've got the luxury of time, both 24 of the companies are extremely successful in what 25 they're doing today and we can take our time to 33 1 2 work those issues properly. The two blank states 3 up in the upper Midwest we have to address pretty 4 quickly and I think we'll want to cover the rest 5 of that map with either blue or red. 6 MR. GRAF: This is Alan. Much like we did with the 7 Caliber acquisition we're certainly going to do a significant amount 8 of market research over time on these branding issues and Doug 9 said there's no need to do that at the moment. We're very 10 happy with how this is going to work. We know that 11 the customer is going to understand that there is a FedEx behind the 12 Vikings and AFs brand and we're very comfortable with that going forward 13 in the near term. 14 Q. Is it fair to say though American 15 Freightways will not grow geographically into the 16 western states where Viking is and Viking is not 17 going to grow itself into American Freightways. The 18 way they have been sort of heading over the last 19 several months or years? 20 A. I think that's one of the real 21 advantages here. There's no need for American 22 now to expand westward. We have great coverage 23 in the west already and we will simply take the 24 time to work on the information systems and 25 operating procedures for these two companies to 34 1 2 work together and they'll have immediate coverage 3 in the west for their customers. 4 Q. Alan, just one last one. In terms of 5 cost savings, is there anything obvious like 6 shutting down one of the corporate headquarters 7 or anything like that that you see in the near 8 term? 9 A. I think the most obvious things are we 10 had Viking and we have American Freightways 11 competing for the same properties in the west. 12 So we're going to see a significant reduction in 13 the combined entities' capital budgets which I 14 think is a home run. With the strength and 15 power of FedEx Corporation's IT capabilities we 16 will not have to do things that American was 17 getting prepared to do immediately such as backup 18 data center, et cetera, et cetera. I think we 19 can give American all the previous research that 20 we've done on scanning techniques and information 21 to the customer. Obviously you think about 22 fedex.com and its uses there. So they are 23 everywhere but we don't have any intention to 24 shut down any of the headquarters. I think over 25 time we will simply be able to grow much faster 35 1 2 with the same level of overhead that we have 3 right now. 4 Q. Okay, thanks a lot. Appreciate it. 5 ANGELO: Thank you, Mr. Wolfe. Our 6 next question is coming from Dan Serita of 7 Reuters. Sir, state your question or comment. 8 Q. Just a follow up of the areas where 9 you overlapped. First of all do you see 10 any -- are you suggesting that eventually the 11 brand that's stronger will be the one that 12 survives, the one that won't will be shut down? 13 A. I don't have any preconceived notions 14 at this point. I mean one of the outcomes could 15 be we stay as is. But we're going to do a 16 thorough amount of research, talk to our 17 customers and we're going to be guided by that. 18 Q. If you wouldn't mind repeating the 19 date when you believe you'll see the 3 to 5 20 percent accretion? 21 A. As I said earlier, we will have some 22 accretion in fiscal 2001 for FedEx Corporation 23 but it won't be material and we believe in 24 fiscal 2002 and beyond it's going to be in the 3 25 to 5 percent range. 36 1 2 Q. Thank you. 3 ANGELO: Thank you. Our next question 4 is coming from Peter Coleman of Bank of America 5 Securities. 6 Q. Good morning, gentlemen. Just a 7 couple quick questions. If you could spend a 8 little more time on why you wouldn't go ahead and 9 integrate fully with Viking. Obviously, it 10 does seem there could be considerable synergies 11 if you actually did combine the two. And then comment, you 12 talked about the overlap, or the lack thereof 13 between the F1, F2 and F3 prongs. And I guess what I'm 14 curious about is what you do in the case of 15 overlap on the ground parcel or RPS side because 16 I think we've increasingly seen over time that 17 there's more of that sort of gray area freight for 18 what a parcel company would be interested in and 19 what a LTL company would be interested in. If 20 you look historically at the Roadway situation, 21 Roadway actually got into a situation where senior 22 management said, hey, you guys, you can't play in 23 this arena at all so I'm wondering how you plan 24 on dealing with those types of disputes. 25 MR. SMITH: This is Fred Smith 37 1 2 speaking. First of all, I think the historical 3 issues of Roadway, the national LTL carrier and 4 RPS have very little to do with the current state 5 of affairs. Roadway was a historical former 6 regulated national LTL carrier whose network was 7 set up to maximize load factors and national 8 coverage. Both Viking and American are regional 9 LTL carriers who are set up to maximize service 10 levels and to focus on the ability to move 11 traffic overnight within a region and on a 12 two-day basis on an inter-regional basis. 13 That is increasingly the way distributions of 14 heavier items are done in this country, regional 15 distribution centers say in the Northeast, the 16 Midwest, Southwest, Southeast, the West and then 17 overnight or two-day service. 18 So Viking and American are focused on 19 those regional markets and that is why it is so 20 important to not put them together. It is 21 important for them to have the focus on the 22 regions where they are successful. So we will 23 regardless of what happens with branding or 24 anything else we will maintain a separate 25 regional operation in the West and a separate 38 1 2 regional operation in the East as part of our LTL 3 freight group. We are very, very confident that 4 that is the best way to grow and serve the 5 customers for this time-definite business. 6 Now, to your question about the 7 overlap between Express and Ground. The Express 8 company is increasingly focused on longer 9 distance movements of time certain shipments 10 including time certain shipments any place in the 11 world. The FedEx Ground system is focused on day 12 specific deliveries of items that can be moved 13 totally by truck. And while there is some 14 overlap there or there has been historically, I 15 have to tell you being in the business for so 16 many years, the differences are much greater than 17 any similarities. 18 The express marketplace generally 19 requires later pickups, its time-certain 20 deliveries, not day-certain deliveries. It 21 requires a very sophisticated choreography 22 between trucks and planes, connecting 150 major 23 airports and almost 300 smaller airports 24 together. It's a different operational 25 discipline required to run our express company 39 1 2 than to run either a ground package system or a 3 regional LTL network. So I don't think any 4 historical situations hold any lessons for the 5 future, and I think our portfolio of networks: 6 ground, express and now freight, are optimized for 7 today's supply chain requirements in this very 8 fast pace economy that we are serving. 9 Q. Okay, so you see just back looking at 10 your ground parcel business and the LTL business, 11 you see relatively little overlap between those 12 two. I'm very clear on the express product. I 13 guess it's the ground parcel and the LTL that I 14 was sort of curious about, what the overlap might 15 be there? 16 A. Well, I think the overlap's pretty 17 small because, you know, to the untrained eye 18 perhaps I mean you see two trucks going down the 19 road and they say American Freightways on it you 20 see two trucks going down the road and it says 21 FedEx Ground, two trucks, 28 foot twin trailers 22 and you say, well, gee, there's got to be some 23 overlap there. Well, there's really not. Just 24 for starters the twin trailers that are being 25 moved for FedEx Ground are in the main drop-frame 40 1 2 trailers which are optimized for cubic 3 utilization of stacking packages. The terminals 4 for FedEx Ground are laid out in an entirely 5 different manner than the terminals for moving 6 palletized items in the LTL sector. If you 7 notice the LTL trucks are not drop-frames, they 8 are regular dry van 28 foot pups which are 9 optimized for moving forklifts and standard 10 wooden pallets in and out of the trailers. The 11 trailers are all dock height to facilitate 12 that. So while there appear to be great 13 synergies they are very distinct market 14 segments. 15 What the customer wants is one stop 16 shopping from FedEx Corporation. That is what we 17 found out after the Caliber acquisition and 18 having the good fortune to have the wonderful Viking 19 franchise. We had many customers that would 20 rather want us to move pallets of shrink wrap 21 packages across a region into the West than break 22 those pallets down and give them to FedEx Ground 23 to deliver. There are lots of synergies on the 24 revenue side. But there are not many synergies 25 on the operational sides because they are 41 1 2 distinct market segments in terms of the physical 3 properties and the operational disciplines 4 necessary to serve those markets. So I want to 5 emphasize again that FedEx Express, FedEx 6 Ground and now the FedEx LTL group will operate 7 distinct and independent networks optimized to 8 their market segments. 9 Q. Okay, thanks. I will turn it over to 10 somebody else. 11 ANGELO: Thank you. Our next question 12 is coming from Susanne Lent of Alliance Capital. 13 Q. Hi. Just a couple of questions. 14 First, can you give us the goodwill number? 15 A. We certainly don't have that quite 16 finalized yet, but it's in the $600 million range. 17 Q. And you said over 40 years? 18 A. Yes. 19 Q. And then could you just elaborate a 20 little bit more on the revenue synergies that you 21 hope to get? I was hoping for some sort of 22 quantification if the underlying market is 23 growing I think you said at 10 percent. Do you 24 think you can surpass that market by how many 25 basis points? Just a little bit more clarity on 42 1 2 the actual size of revenue synergies you hope to 3 get. 4 A. Well, I think I encapsulated that with 5 my earlier comment about accretion, but we absolutely 6 intend to outgrow the market. 7 ANGELO: Our next question is coming 8 from Greg Burns of Lazard. 9 Q. Most of my questions have been 10 answered, but just one on the IT integration. I 11 guess my question is -- this would be either for 12 the FedEx people or the American Freightways 13 people -- what do you see as the challenges, if 14 any, to integrate the IT and then assuming that 15 will take some period of time, and perhaps before 16 that IT is integrated you're going to have Viking 17 shippers shipping stuff to the East Coast and 18 vice versa how are you going to transition the 19 integration of IT, and what are the issues there, 20 if any? 21 A. This is Doug Duncan and, for certain, 22 information about the shipment is vitally 23 important to customers and growing so every day. 24 So that will be one of the early things that we 25 work on to make sure that we have the information 43 1 2 integration between the two systems as well as 3 using the right technology so it integrates with 4 the other FedEx companies. That's very 5 high on my priorities list. 6 MR. SMITH: This is Fred Smith 7 speaking. I would just add to that in studying 8 these industries it was very clear to me that 9 American Freightways was technologically on the 10 leading edge in their industry. They are just 11 first class in every respect. And while we have 12 as a corporation the ability to maximize 13 synergies in the IT area for instance lower 14 telecommunications cost, as Alan said we will be 15 able to lower the cost of American Freightways 16 providing backup, computer power and so forth. 17 There will still be IT units inside our LTL 18 operating companies to permit the continued focus 19 and leadership position in the LTL area. So I 20 don't want to leave any impression that we're 21 going to take the IT people in Viking and 22 American Freightways and put them into FedEx 23 Services. There will be some complimentary 24 activities between the two. But again they will 25 be maintained separately. 44 1 2 I should add, in that regard, that Fedex 3 Ground similarly retains an IT department which 4 reports to the CEO of FedEx Ground, Dan Sullivan, and it 5 works in a harmonious way. And the CIO of FedEx Ground who 6 reports to Dan also reports to the CIO of FedEx Coporation, 7 and we found that is the best way to get the best 8 of both worlds. 9 Q. One more follow up. Alan, it sounds like you 10 think there could be some IT savings synergies but that 11 you haven't calculated them in your guidance on 12 accretion, is that right? There probably are in 13 fact some savings on the IT but you haven't 14 assumed them in those numbers? 15 A. That's correct. I think we'll get in 16 there and we'll find all sorts of strategic 17 sourcing opportunities across the equipment 18 communications and hook up charges et cetera, et cetera. 19 We know a lot of them are there, and we're obviously 20 going after them very aggressively. But they are not 21 included in my accretion numbers. 22 MR. CLIPPARD: Angelo? This is 23 Mr. Clippard speaking. Will you maybe take one 24 or two more questions and then we'll call it a 25 day. 45 1 2 ANGELO: We'll take two more. Our 3 next question is coming from Satish Jindel of SJ 4 Consulting. 5 Q. Gentlemen, clearly for FedEx I think 6 you couldn't have picked a better LTL carrier than 7 American. I'm very happy to see the combination 8 of the two. The three part question I have is 9 all related to what you do going forward with 10 these businesses. One is with respect on the LTL 11 side, just like the other businesses you've got a global 12 presence, how you intend to expand this LTL 13 offering on an international and a global scale. 14 Secondly in terms of pricing, you have been very 15 successful with the FedEx freight and the way you 16 have handled that market. The LTL pricing 17 continues to be a very complex system involving 18 master freight classification and all that. 19 Do you expect to bring about changes 20 in that, that will influence the entire industry? 21 And third, with the Freightways going 22 up to two days with 1600 miles reaching service 23 levels that you do not find in the parcel 24 business via ground service do you expect to see 25 those capabilities being transferred over into 46 1 2 the ground parcel side? 3 A. Well, this is Fred Smith speaking. 4 Satish, number one, you just rattled off a lot of 5 the particular pecularities of the LTL business 6 in terms of the historical rating and so forth. 7 That's exactly why I said that we will continue 8 to maintain a separate LTL sales force and that 9 the synergies will be mostly on the revenue side, 10 and only at the very largest companies where we 11 have a single sales executive representing FedEx 12 Corporation and the Express and Ground sales 13 force will call in the LTL freight specialist on 14 an as needed basis and vice versa. So we don't 15 think that we can unilaterally change decades of 16 historical practice of pricing and commodity 17 classifications and so forth. 18 Having said that, American Freightways 19 and Viking both have been very innovative and 20 leaders in terms of pricing schemes and options 21 and so forth and I think you can anticipate that 22 that will continue. 23 In terms of the synergies between 24 freight and ground, as I said a few minutes ago, 25 I do not see those cross-operating synergies. I 47 1 2 think attempts to try to force those types of 3 operational synergies are counter-productive. 4 They are different types of hubs, they are 5 different types of vehicles. They are different 6 operating windows in terms of pickup and 7 delivery. That's even more so for the express 8 business. 9 I think the option -- the 10 opportunities for synergies are mainly between 11 Viking and American in terms of new revenue 12 opportunities and then from the LTL group 13 cross-selling our ground and express and vice 14 versa. 15 So hopefully that answers all your 16 questions. 17 Let me just add, we have built a very 18 sophisticated pricing organization at FedEx 19 Services that understands the bundle and we will 20 be able to price the bundle at corporate where we 21 have customers who are availing themselves in all of 22 our portfolio. Which I think will be a very 23 important factor in the total bottom line of 24 FedEx Corporation improving going forward. And 25 we had been working very diligently on this. We 48 1 2 have put a lot of resources into it. I can tell 3 you they are very sophisticated. We know the 4 profitability by product, by customer and we're 5 going to be taking a huge advantage of that now with 6 the acquisition of American Freightways. 7 Q. If I can just comment on that. You're 8 going to take this bundling approach that you 9 have been able to employ with the Express and 10 Ground to the next level of integrating the LTL 11 shipments into it? 12 A. Absolutely. 13 Q. Some thing you don't have at the 14 present time? 15 A. Absolutely right, Satish. As far as 16 international goes there is no reason in the 17 world why we can't have, over time, our 18 international freight interfacing with our ground 19 LTL units now in the U.S. Absolutely it could make a 20 lot of sense. 21 Q. Great move. Thank you gentlemen. 22 ANGELO: Thank you 23 Mr. Satish Jindel. Our final question is from 24 Donald Button of A.G. Edwards. 25 Q. Congratulations to all of you. 49 1 2 To Sheridan and Tom especially, you guys have come 3 a long way with the days of adding all point 4 service to the State of Illinois was your big 5 announcement. 6 Most of my questions have been asked 7 and answered, but the remaining question I have is 8 directed to the Garrisons. Can you refresh our 9 memory what percentage of the freight you are 10 currently moving is already next day service and 11 what percentages is second day service? 12 A. We're running about, let's see, 40 and 13 50 -- we're running about 40 percent next day and 14 55, 56 percent second day and 44 percent third 15 day. 16 Q. And how does this change the complexion 17 of this acquisition, change the complexion of the 18 marketing of your American Flyer service? 19 A. I don't think it will change it at all 20 I think it is just build on it. I don't think there will be anything negative, I think it will be a positive. 21 Q. Good. Well, good luck, gentlemen. 22 A. One more comment. This is Fred Smith 23 I want to amplify what Alan said and Satish Jindel 24 asked a few moments ago. American Freightways 25 and Viking both currently have offshore 50 1 2 services. Viking serves Hawaii, it serves, via 3 sea, Alaska, it has arrangements to move traffic 4 into Canada and into Mexico. American 5 Freightways has good service down to Puerto Rico 6 and to Mexico and into Latin American. And where 7 we're particularly anxious to see our portfolio 8 expand around the LTL group is to be able to move 9 freight shipments via low cost international 10 service transported movements. Obviously our 11 express company does a great job of moving door 12 to door real time sensitive freight, all 13 packages, all documents and this will give us a 14 new dimension over time and we intend to exploit 15 that. 16 MR. CLIPPARD: I think that wraps up 17 the call. I want to express our appreciation to 18 everyone that was on the call today. Thank you 19 very much for your very good questions and again, 20 thanks. We'll see you at our conference call in 21 December. 22 ANGELO: Thank you, ladies and 23 gentlemen, that does conclude today's 24 teleconference. You may disconnect your lines at 25 this time and have a wonderful day. If you 51 1 2 joined the call late you can access a replay of 3 the call by dialing (888) 888-9543. The replay 4 will be available for one week. Once again we 5 thank you for your participation and have a great 6 day. 7 Elisa Dreier Reporting Corp. (212) 557-5558 780 Third Avenue, New York, NY 10017 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.