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): DECEMBER 3, 2001
EGL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 000-27288 76-0094895
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
15350 VICKERY DRIVE, HOUSTON, TEXAS 77032
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 618-3100
ITEM 9. REGULATION FD DISCLOSURE
The information in Item 9 of this report is being furnished, not filed,
pursuant to Regulation FD by EGL, Inc. (the "Company" or "EGL"). Accordingly,
the information in Item 9 of this report will not be incorporated by reference
into any registration statement filed by EGL under the Securities Act of 1933,
as amended, unless specifically identified therein as being incorporated therein
by reference. The furnishing of the information in this report is not intended
to, and does not, constitute a determination or admission by EGL, that the
information in this report is material or complete, or that investors should
consider this information before making an investment decision with respect to
any security of EGL or any of its affiliates.
REALIGNMENT OF SALES ORGANIZATION
EGL's North America organization has been realigned to provide a more
customer-focused approach. EGL's U.S. operations have been reorganized and the
number of regions has been reduced from five to three. The realignment is
intended to re-deploy experienced field managers into sales roles and to create
further cost synergies for the Company. As part of the realignment, EGL's major
global customers will have a dedicated senior sales and operations manager
focused on customizing global solutions and services. Additionally, each of
EGL's seven major industry groups will have a dedicated sales manager intended
to develop industry specific solutions. The reductions in the number of regions
will also allow the senior managers to be redeployed from region positions to
the larger metropolitan areas (or "A" markets) to focus on local accounts.
Joe Bento has been appointed as EGL's global Chief Marketing Officer
leading the realigned sales organization. Ron Talley and Georgio Laccona have
been appointed Chief Operating Officers domestic and international,
respectively. Mr. Bento will lead the sales and products teams while the field
operations will report to Mr. Talley and Mr. Laccona.
DHL AGREEMENT
EGL has reached an agreement in principle with DHL Airways to expand
the existing relationship whereby DHL provides capacity in its system in the
United States to EGL. In addition, DHL intends to utilize a portion of EGL's air
and ground network. EGL had recently been awarded several trade lanes by DHL to
move freight in EGL's ground network. The new arrangement contemplates DHL's
initiating use of EGL's air charter network and expanding its use of the EGL
ground network.
The continued relationship with DHL is designed to allow both companies
to play to each other's strengths. The Company believes that as it moves into
the seasonally softer first quarter next year, it is important that its cost of
transportation remain flexible
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without compromising the Company's capability of providing heavy cargo lift and
service to its customers. The completion of the arrangements with DHL is
expected to provide EGL broader coverage in the United States, allowing arrivals
in key markets by 7:00 A.M. EGL had previously announced plans to reduce from
six to four the number of dedicated airplanes under extended leases on January
1, 2002. EGL believes that the DHL arrangements, when in place, will enhance its
ability to aggressively pursue market share and will provide significant cost
savings compared to those relating to the Company's current charter network. The
new arrangement with DHL is subject to negotiation and execution of a definitive
agreement. The Company will be working toward entering into a binding definitive
written agreement with DHL in the near future.
MID-QUARTER UPDATE
EGL announced that activity for October and November is progressing at
expected levels. The U.S. shipment count for October and November has rebounded
to pre-September 11 levels. Europe net revenue levels have continued to improve,
reaching a high for the year in November. Historically, December has been the
strongest month of the quarter.
After a slightly weaker October and a relatively stronger November, EGL
anticipates that it will generate earnings in the fourth quarter of $0.02 to
$0.04 per share.
2002 SAVINGS AND IMPROVEMENTS
Management estimates that the realignment of the North America
organization, benefits accruing from the expected arrangement with DHL,
continued reductions in information technology spending and further reductions
in compensation expense in anticipation of the seasonally soft first quarter
should result in cost reductions and margin improvements in a range of $15 to
$20 million during 2002.
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FORWARD LOOKING STATEMENT
The statements in this Current Report on Form 8-K regarding
the realignment of sales organization including its effects and cost synergies,
the DHL agreement in principle (including its effect, timing, DHL's use of EGL's
networks, number of and time of arrival in markets, market share and cost
savings), a DHL definitive agreement, seasonally softer first quarter, fourth
quarter results, including anticipated earnings per share and December results,
2002 cost reductions and margin improvements, reductions in information
technology spending and compensation expense and any other statements, which are
not historical facts, are forward-looking statements. Such statements involve
risks and uncertainties, including, but not limited to, customer responses,
effectiveness of the realigned sales organization, whether the DHL agreement
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progresses from an oral agreement in principle to a binding agreement,
effectiveness and cost savings from the DHL relationship, results of operations,
general economic conditions, competition, availability of cargo space,
litigation results, information technology needs and costs, loss of key
personnel, and other factors detailed in the EGL's most recent Form 10-K and
other filings with the Securities and Exchange Commission. Should one or more of
these risks or uncertainties materialize, or should underlying assumption prove
incorrect, actual outcomes may vary materially from those indicated.
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SIGNATURE
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.
Date: December 3, 2001 EGL, INC.
By: /s/ Elijio V. Serrano
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Elijio V. Serrano
Chief Financial Officer
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