SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - -- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999 - -- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 333-42607 GEOLOGISTICS CORPORATION (Exact name of registrant as specified in its charter) Delaware 22-3438013 - -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13952 Denver West Parkway Golden, Colorado 80401 ---------------------- (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code: (303) 704-4400 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -- -- On August 16, 1999, the registrant had 2,118,893 outstanding shares of common stock, par value $.001 per share. GEOLOGISTICS CORPORATION TABLE OF CONTENTS PART I. FINANCIAL INFORMATION PAGE - ------- --------------------- ---- ITEM 1. Financial Statements: Condensed Consolidated Balance Sheets, June 30, 1999 (unaudited) and December 31, 1998 3 Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 1999 and 1998 (unaudited) 5 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 1998 (unaudited) 6 Notes to the Condensed Consolidated Financial Statements 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15 ITEM 3. Information required for this item has been included in Management's Discussion and Analysis. PART II. OTHER INFORMATION ITEM 2. Changes in Securities 28 ITEM 6. Exhibits and Reports on Form 8-K 28 2 PART I. FINANCIAL INFORMATION GEOLOGISTICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) JUNE 30, DECEMBER 31, 1999 1998 -------------- ---------------- (UNAUDITED) Current assets: Cash and cash equivalents $ 12,618 $ 15,152 Accounts receivable: Trade, net 247,068 267,047 Other 11,110 11,046 Deferred income taxes 7,228 7,245 Prepaid expenses 22,319 20,708 -------- -------- Total current assets 300,343 321,198 ------- ------- Property and equipment, at cost 107,889 113,618 Accumulated depreciation (20,157) (18,364) -------- -------- Net property and equipment 87,732 95,254 Notes receivable, less current portion 1,715 1,711 Deferred income taxes 19,134 19,168 Goodwill, net 78,191 79,347 Intangible assets, net 11,316 11,927 Other assets 19,630 20,573 -------- -------- $518,061 $549,178 -------- -------- -------- -------- See accompanying notes to the condensed consolidated financial statements. 3 GEOLOGISTICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) JUNE 30, DECEMBER 31, 1999 1998 ----------- ----------- (UNAUDITED) Current liabilities: Current portion of long term debt $ 19,988 $ 12,549 Accounts payable 129,807 139,696 Accrued expenses 121,529 149,519 Income taxes payable 6,561 7,940 --------- --------- Total current liabilities 277,885 309,704 Long-term debt, less current portion 215,403 183,177 Other noncurrent liabilities 48,617 52,400 Minority interest 3,024 2,381 --------- --------- Total liabilities 544,929 547,662 Stockholders' (deficit) equity: Preferred stock 15,000 shares authorized, issued and outstanding 14,550 14,550 Common stock ($.001 par value 5,000,000 shares authorized, 2,118,893 and 2,128,893 shares issued and outstanding) 2 2 Additional paid-in-capital 56,091 55,371 Accumulated deficit (96,327) (67,898) Notes receivable from stockholders (191) (191) Cumulative translation adjustment (993) (318) ---------- ---------- Total stockholders' (deficit) equity (26,868) 1,516 -------- --------- $518,061 $549,178 -------- --------- -------- --------- See accompanying notes to the condensed consolidated financial statements. 4 GEOLOGISTICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AMOUNTS) THREE-MONTHS SIX-MONTHS ENDED JUNE 30, ENDED JUNE 30, --------------------------- ------------------------- 1999 1998 1999 1998 -------- -------- -------- -------- Revenues $395,770 $371,211 $761,099 $736,875 Transportation and other direct costs 301,004 277,854 574,297 554,480 -------- -------- -------- -------- Net revenues 94,766 93,357 186,802 182,395 Selling, general and administrative expenses 96,559 86,725 191,267 174,630 Depreciation and amortization 5,059 3,900 9,701 7,713 -------- -------- -------- -------- Operating income (loss) (6,852) 2,732 (14,166) 52 Interest expense, net (5,572) (3,903) (11,146) (7,337) Other income (expense) (305) 159 (450) 146 -------- -------- -------- -------- Loss before income taxes and minority interest (12,729) (1,012) (25,762) (7,139) Income tax provision (benefit) (769) (279) 1,031 (2,236) -------- -------- -------- -------- Loss before minority interest (11,960) (733) (26,793) (4,903) Minority interest (432) (215) (587) (373) -------- -------- -------- -------- Net loss $(12,392) $ (948) $(27,380) $ (5,276) -------- -------- -------- -------- -------- -------- -------- -------- Preferred stock dividend (525) - (1,050) - -------- -------- -------- -------- Loss applicable to common stock $(12,917) $ (948) $(28,430) $ (5,276) -------- -------- -------- -------- -------- -------- -------- -------- Basic loss per common share $ (6.10) $ (.45) $ (13.39) $ (2.50) -------- -------- -------- -------- -------- -------- -------- -------- Diluted loss per common share $ (6.10) $ (.45) $ (13.39) $ (2.50) -------- -------- -------- -------- -------- -------- -------- -------- Weighted average number of common and common equivalent shares outstanding 2,118,893 2,129,318 2,123,179 2,113,126 -------- -------- -------- -------- -------- -------- -------- -------- See accompanying notes to the condensed consolidated financial statements. 5 GEOLOGISTICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) SIX-MONTHS ENDED JUNE 30, 1999 1998 -------- ------- Cash flows used in operating activities: Net loss $(27,380) $(5,276) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 9,701 7,713 Amortization of deferred items 899 579 Deferred income taxes 51 (3,678) Changes in current assets and liabilities, net (20,955) (17,100) Other, net 891 (2,235) -------- ------- Net cash used in operating activities (36,793) (19,997) Cash flows used in investing activities: Purchases of property, equipment and software, net (6,125) (13,823) -------- ------- Net cash used in investing activities (6,125) (13,823) Cash flows provided by financing activities: Proceeds from revolving line of credit, net 25,542 16,100 Proceeds from long-term debt 16,936 10,896 Payments on long-term debt (2,814) (8,380) Proceeds from issuance of common stock 720 1,673 Other, net - 140 -------- ------- Net cash provided by financing activities 40,384 20,429 -------- ------- Net decrease in cash and cash equivalents (2,534) (13,391) Cash and cash equivalents, beginning of period 15,152 37,909 -------- ------- Cash and cash equivalents, end of period $12,618 $24,518 -------- ------- -------- ------- Supplemental cash flow information: Interest paid during the period $10,084 $ 6,581 Income taxes paid during the period $ 1,341 $ 1,454 Noncash warrant transactions $ 720 $ 720 New capital leases $ 704 $ 4,465 See accompanying notes to the condensed consolidated financial statements 6 GEOLOGISTICS CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION: The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in GeoLogistics Corporation's ("Company") Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1998. The condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation in accordance with generally accepted accounting principles of the condensed consolidated financial statements for the periods shown. Certain amounts for the prior year have been reclassified to conform with the current year financial statement presentation. Significant accounting policies followed by the Company are included in Note 2 to the audited consolidated financial statements in the Company's Form 10-K. Results of operations for the three and six months ended June 30, 1999 may not be indicative of the results to be expected for the full year. PRINCIPLES OF CONSOLIDATION: The accompanying condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. The Company records its investment in each unconsolidated affiliated company (20 to 50 percent ownership) using the equity method of accounting. Other investments (less than 20 percent ownership) are recorded at cost. Intercompany accounts and transactions have been eliminated. USE OF ESTIMATES: The financial statements have been prepared in conformity with generally accepted accounting principles and, as such, include amounts based on informed estimates and judgments of management. Actual results could differ from those estimates. Accounts affected by significant estimates include accounts receivable and accruals for transportation and other direct costs, tax contingencies, insurance claims, cargo loss and damage claims. 7 GEOLOGISTICS CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN THOUSANDS) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) EARNINGS PER SHARE Basic earnings per common share is computed using the weighted average number of shares outstanding. Diluted earnings per common share is computed under the treasury stock method using the weighted average number of shares outstanding adjusted for the incremental shares attributed to outstanding warrants to purchase common stock. Incremental shares were not used in the calculation of diluted loss per common share due to their antidilutive effect. NOTE 2. LONG-TERM DEBT In October 1997, the Company issued and sold $110.0 million in aggregate principal amount of its 9 3/4% senior notes (the "Notes") which are due October 15, 2007, and are general unsecured obligations of the Company. The Notes are fully and unconditionally guaranteed on a joint and several senior basis by all existing and future domestic Restricted Subsidiaries (as defined in the indenture relating to the Notes). Three of the Company's domestic subsidiaries hold as their sole assets all of the issued and outstanding equity interests of the Company's direct non-guarantor foreign subsidiaries. 8 GEOLOGISTICS CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN THOUSANDS) NOTE 2. LONG-TERM DEBT (CONTINUED) The following is condensed combined financial information of guarantor and non-guarantor subsidiaries: Balance Sheet as of June 30, 1999 -------------------------------------------------------------- Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Combined --------- ------------ ------------- ------------ -------- Cash and cash equivalents..................... $ 2,689 $ 1,414 $ 8,515 $ - $ 12,618 Accounts receivable, net...................... 309 96,816 184,187 (34,244) 247,068 Property, net................................. 6,278 24,234 57,220 - 87,732 Intangible assets, net........................ 8,597 77,908 3,921 (919) 89,507 Other assets.................................. 66,232 32,148 45,183 (62,427) 81,136 ------- ------- -------- -------- ------- Total assets................................ $84,105 $232,520 $299,026 $(97,590) $518,061 ------- ------- -------- -------- ------- ------- ------- -------- -------- ------- Current liabilities........................... $ 1,699 $101,112 $215,224 $(40,150) $277,885 Long-term debt, less current portion.......... 204,686 1,472 9,245 - 215,403 Other noncurrent liabilities.................. (167,080) 163,824 49,910 4,987 51,641 Stockholders' (deficit) equity................ 44,800 (33,888) 24,647 (62,427) (26,868) ------- -------- ------- -------- -------- Total liabilities and stockholders' deficit. $ 84,105 $232,520 $299,026 $(97,590) $518,061 ------- -------- ------- -------- -------- ------- -------- ------- -------- -------- Statement of Operations for the Six Months Ended June 30, 1999 --------------------------------------------------------------- Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Combined ------- ------------ ------------ ------------ -------- Revenues.................................... $ - $304,327 $529,063 $(72,291) $761,099 Transportation and other direct costs....... - 231,792 414,796 (72,291) 574,297 Operating expenses.......................... 7,748 80,620 112,600 - 200,968 ------- -------- --------- ------------ ------- Operating income (loss)..................... (7,748) (8,085) 1,667 - (14,166) Interest, net............................... (2,438) (7,128) (1,580) - (11,146) Other income (expense) net.................. 355 (1,540) 735 - (450) Income tax provision ....................... 28 - 1,003 - 1,031 Minority interest........................... - - (587) - (587) ------- -------- --------- ------------ ------- Net loss.................................. $(9,859) $(16,753) $ (768) $ - $(27,380) ------- -------- --------- ------------ ------- ------- -------- --------- ------------ ------- 9 GEOLOGISTICS CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN THOUSANDS) Statement of Cash Flows for the Six Months Ended June 30, 1999 ----------------------------------------------------------------- Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Combined --------- ------------ ------------- ------------ --------- Cash flows (used in) provided by: Operating activities....................... $(14,800) $(19,209) $ (3,375) $ 591 $(36,793) Investing activities....................... 4,621 (7,663) (3,083) - (6,125) Financing activities....................... 12,841 25,752 2,382 (591) 40,384 Net increase (decrease) in cash and cash equivalents................................ 2,662 (1,120) (4,076) - (2,534) Cash and cash equivalents, beginning of period..................................... 27 2,534 12,591 - 15,152 ------- ------- ------ ----- ------ Cash and cash equivalents, end of period..... $ 2,689 $ 1,414 $ 8,515 $ - $ 12,618 ------- ------- ------ ----- ------ ------- ------- ------ ----- ------ NOTE 3. SEGMENT INFORMATION The Company has adopted Statement of Financial Accounting Standards (FAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information". This statement required the Company to change the way it reports information about its operations. Information for 1998 has been restated to conform to the 1999 presentation of operating segment information. The Company operates in a single business segment providing worldwide logistics solutions to meet customers' specific requirements for transportation and related services by arranging and monitoring all aspects of material flow activities utilizing advanced information technology systems. The Company manages its business primarily on a geographic basis. The Company's reportable geographic segments are comprised of North America, Europe and Asia. Each geographic segment provides products and services previously described. Accounting policies for each geographic segment are the same as those described in "Summary of Significant Accounting Policies" in Note 2 of the Notes to the Consolidated Financial Statements included in the Form 10-K filed for the year ended December 31, 1998. The Company evaluates the performance of each geographic segment primarily based on EBITDA. EBITDA represents earnings before interest, taxes, depreciation and amortization. Corporate expenses are excluded from geographic segment EBITDA. Corporate expenses are comprised primarily of marketing costs, incremental information technology costs and other general and administrative expenses which are separately managed. Geographic segment assets exclude corporate assets. Corporate assets include cash and cash equivalents, capitalized software development costs and intangible assets. 10 GEOLOGISTICS CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN THOUSANDS) Information regarding the Company's operations by geographic region is summarized below. THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------- ------------------- 1999 1998 1999 1998 ---- ---- ---- ---- North America: Total revenues $187,062 $183,851 $358,688 $360,695 Transactions between regions 14,955 12,303 27,704 27,721 Revenues from customers 172,107 171,548 330,984 332,974 Net revenues 41,945 40,493 81,336 80,399 EBITDA (55) 4,856 (574) 6,038 Depreciation and amortization 3,658 2,660 6,805 5,610 Interest expense, net (4,000) (2,206) (7,449) (4,192) Europe: Total revenues $177,529 $176,274 $350,484 $356,594 Transactions between regions 19,614 26,222 44,476 50,370 Revenues from customers 157,915 150,052 306,008 306,224 Net revenues 36,935 40,076 75,539 77,825 EBITDA (562) 2,601 (225) 4,492 Depreciation and amortization 808 566 1,657 1,343 Interest expense (94) (77) (180) (33) Asia: Total revenues $85,548 $65,343 $163,864 $128,188 Transactions between regions 19,800 15,732 39,757 30,511 Revenues from customers 65,748 49,611 124,107 97,677 Net revenues 15,886 12,788 29,927 24,171 EBITDA 2,528 1,429 3,997 2,558 Depreciation and amortization 446 369 874 518 Interest expense, net 5 74 (120) (7) Information regarding the Company's long lived assets by geographic region is summarized below. JUNE 30, DECEMBER 31, 1999 1998 ---- ---- Long lived assets: North America $29,591 $27,538 Europe 43,283 48,628 Asia 6,573 6,244 Corporate 8,285 13,024 ------- ------- Consolidated $87,732 $95,254 ------- ------- ------- ------- 11 GEOLOGISTICS CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN THOUSANDS) A reconciliation of the Company's geographic segment revenues, net revenues, EBITDA and assets to the corresponding consolidated amounts as of and for the three months ended June 30, 1999 and 1998 is as follows: THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------- ------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Revenues: North America $187,062 $183,851 $358,688 $360,695 Europe 177,529 176,274 350,484 356,594 Asia 85,548 65,343 163,864 128,188 Eliminations (54,369) (54,257) (111,937) (108,602) -------- -------- -------- -------- Consolidated $395,770 $371,211 $761,099 $736,875 -------- -------- -------- -------- -------- -------- -------- -------- Net revenues: North America $41,945 $40,493 $ 81,336 $ 80,399 Europe 36,935 40,076 75,539 77,825 Asia 15,886 12,788 29,927 24,171 ------ ------ -------- -------- Consolidated $94,766 $93,357 $186,802 $182,395 -------- -------- -------- -------- -------- -------- -------- -------- EBITDA: North America $ (55) $4,856 $ (574) $ 6,038 Europe (562) 3,842 (225) 5,912 Asia 2,528 1,948 3,997 3,088 Corporate (3,704) (4,014) (7,663) (7,265) ------ ------ ------ ------ Consolidated $ (1,793) $6,632 $(4,465) $ 7,765 -------- -------- -------- -------- -------- -------- -------- -------- JUNE 30, DECEMBER 31, 1999 1998 ---- ---- Assets: North America $254,639 $260,694 Europe 240,671 263,481 Asia 90,700 86,119 Corporate 489,205 482,429 Eliminations (557,154) (543,545) -------- -------- Consolidated $518,061 $549,178 -------- -------- -------- -------- Revenue from transfers between regions represents approximate amounts that would be charged if the service were provided by an unaffiliated company. Total regional revenue is reconciled with total consolidated revenue by eliminating inter-regional revenue. 12 GEOLOGISTICS CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN THOUSANDS) NOTE 4. OTHER COMPREHENSIVE INCOME The Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," which established standards for reporting and display of comprehensive income and its components in the financial statements. Comprehensive income is comprised of all changes to stockholders' equity, including net income, except those changes resulting from investments by owners and distributions to owners. Other comprehensive income in the financial statements of the Company represents the change in foreign currency translation adjustments resulting from the conversion of the financial statements for foreign subsidiaries from local currency to U.S. dollars. Comprehensive income (loss) for the three and six months ended June 30, 1999 and 1998 is as follows (in thousands): THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, 1999 1998 1999 1998 ---- ---- ---- ---- Cumulative translation adjustment $ (742) $1,636 $ (675) $ 650 Net loss (12,392) (948) (27,380) (5,276) ------- ------- ------- ------ Comprehensive loss $(13,134) $ 688 $(28,055) $(4,626) ------- ------- ------- ------ ------- ------- ------- ------ NOTE 5. RESTRUCTURING COSTS On March 4, 1999, the Company announced its intended restructuring of its GeoLogistics Americas ("Americas") business as a result of a fourth quarter 1998 operating loss. The Americas operating unit experienced a difficult freight forwarding environment as a result of generally lower volumes and the effects of the Asian economic crisis. In addition, the Company is reevaluating the operations of its other business units to determine what initiatives can be taken to help reduce costs in light of lower volumes and market softness in the European region. 13 GEOLOGISTICS CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (IN THOUSANDS) As part of the restructuring process, a new management team was put in place primarily to improve the global operating results. This new management team together with the Company's advisors is in process of designing initiatives to provide greatly improved operating results. As these initiatives are in the formative stages, it is not possible to discuss the actions to be taken nor the expected financial results thereof. The restructuring plan is expected to commence in the fourth quarter of this year at which time the related costs will be recorded as a charge to earnings. NOTE 6. SUBSEQUENT EVENT On August 6, 1999 the Company entered into an agreement to sell substantially all of the assets of its GeoLogistics Air Services, Inc. ("GLAS") business unit to FDX Global Logistics, Inc., a wholly-owned subsidiary of FDX Corporation, for aggregate cash consideration of $115.8 million in accordance with the terms of the Asset Purchase Agreement (the "Asset Purchase Agreement") among the Company, Americas, GLAS, FDX Corporation and FDX Global Logistics, Inc. The Company anticipates using the proceeds to reduce revolving debt. Consummation of the sale of GLAS is subject to receipt of certain third party and governmental consent and there can be no assurances that the transaction will be consummated. For the six months ended June 30, 1999 revenues from the GLAS operations contributed approximately $48.2 million to the Company's revenues and income from GLAS operations contributed approximately $8.0 million of income to the Company's loss from operations of $14.2 million. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY INCLUDED ELSEWHERE IN THIS REPORT. THIS QUARTERLY REPORT ON FORM 10-Q MAY CONTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DISCUSSIONS CONTAINING SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE MATERIAL SET FORTH HEREIN AS WELL AS WITHIN THIS QUARTERLY REPORT GENERALLY. ALSO, DOCUMENTS SUBSEQUENTLY FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION MAY CONTAIN FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTIONS IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE CHALLENGES AND UNCERTAINTIES INHERENT IN SUCCESSFULLY IMPLEMENTING THE COMPANY'S BRANDING, INFORMATION TECHNOLOGY AND COST REDUCTION STRATEGIES AND THE OTHER RISK FACTORS AND MATTERS IDENTIFIED HEREIN OR IN OTHER PUBLIC FILINGS BY THE COMPANY, INCLUDING BUT NOT LIMITED TO THE COMPANY'S REGISTRATION STATEMENT ON FORM S-4 (FILE NO. 333-42607), ANNUAL REPORT ON FORM 10-K (FILED ON MARCH 31, 1999) AND QUARTERLY REPORT ON FORM 10-Q (FILED MAY 14, 1999), SUCH AS RISKS RELATING TO THE COMPANY'S LEVERAGE AND ABILITY TO SERVICE ITS DEBT OBLIGATIONS, CHALLENGES PRESENTED BY INTEGRATION OF RECENT ACQUISITIONS AND IN THE AMERICAS BUSINESS, RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND CURRENCY FLUCTUATIONS AND RISKS RELATED TO INFORMATION TECHNOLOGY IMPLEMENTATION AND INTEGRATION. GENERAL The Company commenced operations on May 2, 1996 in connection with its acquisition of The Bekins Company ("Bekins"). On October 31, 1996, the Company acquired GeoLogistics Americas ("Americas") and GeoLogistics Company ("Canada") and securities representing 33.3%, in the aggregate, of the common equity of LEP International Worldwide Limited ("LIW"). On November 7, 1996, the Company acquired GeoLogistics Services ("Services"). On September 30, 1997, the Company acquired an additional 41.9% of the common equity of LIW and on December 15, 1997, the Company completed the acquisition of all of the remaining equity securities of LIW. On July 13, 1998, the Company purchased substantially all of the operating assets and assumed certain of the liabilities ("Air Services Acquisition") of Caribbean Air Services, Inc. All acquisitions were accounted for by the purchase method of accounting, and 15 accordingly, the book values of the assets and liabilities of the acquired companies were adjusted to reflect their fair values at the dates of acquisition. The portion of the Company's business that is focused on traditional transportation and logistics services normally experiences a higher percentage of its revenues and operating income in the fourth calendar quarter as volumes increase for the holiday season. Conversely, the Company's domestic household goods relocation business experiences approximately half of its revenue between June and September. In addition, Services has a significant project logistics business which is cyclical due to its dependence upon the timing of shipment volumes for large, one-time projects. On March 4, 1999, the Company announced its intended restructuring of its GeoLogistics Americas ("Americas") business as a result of a fourth quarter 1998 operating loss. The Americas operating unit experienced a difficult freight forwarding environment as a result of generally lower volumes and the effects of the Asian economic crisis. In addition, the Company is reevaluating the operations of its other business units to determine what initiatives can be taken to help reduce costs in light of lower volumes and market softness in the European region. As part of the restructuring process, a new management team was put in place primarily to improve the global operating results. This new management team together with the Company's advisors is in process of designing initiatives to provide greatly improved operating results. As these initiatives are in the formative stages, it is not possible to discuss the actions to be taken nor the expected financial results thereof. The restructuring plan is expected to commence in the fourth quarter of this year at which time the related costs will be recorded as a charge to earnings. On August 6, 1999 the Company entered into an agreement to sell substantially all of the assets of its GeoLogistics Air Services, Inc. ("GLAS") business unit to FDX Global Logistics, Inc., a wholly-owned subsidiary of FDX Corporation, for aggregate cash consideration of $115.8 million in accordance with the terms of the Asset Purchase Agreement (the "Asset Purchase Agreement") among the Company, Americas, GLAS, FDX Corporation and FDX Global Logistics, Inc. The Company anticipates using the proceeds to reduce revolving debt. Consummation of the sale of GLAS is subject to receipt of certain third party and governmental consent and there can be no assurances that the transaction will be consummated. 16 For the six months ended June 30, 1999 revenues from the GLAS operations contributed approximately $48.2 million to the Company's revenues and income from GLAS operations contributed approximately $8.0 million of income to the Company's loss from operations of $14.2 million. The following discussion and analysis relates to the results of operations for the Company as reported for the six months ended June 30, 1999 and 1998, and should be read in conjunction with the consolidated financial statements of the Company included elsewhere in this Form 10-Q. THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------- ------------------ 1999 1998 1999 1998 ---- ---- ---- ---- (IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Revenues $395,770 $371,211 $761,099 $736,875 Net revenues 94,766 93,357 186,802 182,395 Selling, general and administrative expenses 96,559 86,725 191,267 174,630 Depreciation and amortization 5,059 3,900 9,701 7,713 Operating income (loss) (6,852) 2,732 (14,166) 52 Interest expense, net (5,572) (3,903) (11,146) (7,337) Other income (expense), net (305) 159 (450) 146 Income tax provision (benefit) (769) (279) 1,031 (2,236) Minority interest (432) (215) (587) (373) Net loss (12,392) (948) (27,380) (5,276) THREE MONTHS ENDED JUNE 30, 1999 VERSUS THREE MONTHS ENDED JUNE 30, 1998 REVENUES. The Company's revenues increased approximately $24.6 million to $395.8 million for the three months ended June 30, 1999 from $371.2 million for the three months ended June 30, 1998. Asia/Pacific region revenues increased $20.2 million, due primarily to increased export volumes and new customers. Also contributing additional revenue of $13.6 million in the period was GLAS which was acquired in July 1998 and Canada and Europe which contributed $2.7 million and $1.5 million, respectively, more revenue than the prior period. These increases were offset by a decline in the Americas business unit of $8.4 million, due to lower domestic and international forwarding volumes as a result of a difficult freight forwarding environment. GeoLogistics Network Solutions ("GNS") revenues declined $3.1 million primarily due to lower 17 volumes as a result of customer industry consolidations. Services business unit revenues decreased $2.0 million, on lower volume in both project cargo and international relocation product lines as a result of declining international relocations and softness in the oil and gas industries. Had foreign exchange rates remained constant from 1998 to 1999, consolidated revenues would have been $2.8 million higher than the actual 1999 results. NET REVENUES. Net revenues, which represent gross profit after deducting transportation and other direct costs, increased by approximately $1.4 million, to $94.8 million for the three months ended June 30, 1999 from $93.4 million for the same period in 1998. Net revenues as a percentage of revenues decreased to 23.9% in 1999 from 25.1% for the same period in 1998. This decrease in margins was primarily due to a $3.1 million decrease in net revenues in Europe resulting from softness in the economy which accounted for a substantial portion of the overall decrease. In addition, reductions in Americas and Services, due to lower revenues as previously discussed, and GeoLogistics Network Solutions as a result of lower revenues and decreased profit margins contributed to the decrease in net revenues. The effect of the acquisition of GLAS partially offset these margin decreases. Had foreign exchange rates remained constant from 1998 to 1999, consolidated net revenues would have been $0.1 million less than 1999 actual results. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased by approximately $9.9 million, to $96.6 million for the three months ended June 30, 1999 from $86.7 million for the three months ended June 30, 1998. These expenses as a percentage of net revenues increased to 101.9% in 1999 from 92.9% for the same period in 1998 primarily as a result of a disproportionately higher decrease in net revenues in the Americas business unit versus the $3.3 million increase in selling, general and administrative expenses. Expenses in excess of net revenues in the Services business units due to lower volumes also contributed to the increase. Selling, general and administrative expenses relating to GLAS amounted to $0.6 million of the increase from 1998. The remaining $6.0 million increase in expenses was due to higher expenses experienced in all other operating units. DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense increased $1.2 million for the three months ended June 30, 1999 compared to the prior year period primarily as the result of the acquisition of GLAS ($0.3 million) and an increase in fixed assets primarily related to information technology. 18 OPERATING LOSS. The Company recorded a $6.9 million operating loss for the three months ended June 30, 1999 compared to $2.7 million of operating income for the three months ended June 30, 1998. Increased profits in Asia Pacific Region and GLAS were offset by higher operating losses in the Americas, Europe and the Services business units as previously discussed. INTEREST EXPENSE, NET. Interest expense, net, increased by approximately $1.7 million, to $5.6 million for the second quarter of 1999 from $3.9 million for the same period of 1998. The increase was associated with the issuance of the $15.0 million debt to finance the Air Services Acquisition in July 1998 and higher levels of working capital-related borrowings required as a result of the losses at GNS, Services and the Americas operating units. INCOME TAX BENEFIT. The income tax benefit for the three months ended June 30, 1999 increased $0.5 million to a $0.8 million benefit versus a $0.3 million tax benefit for the same period of 1998 as a result of a reversal of first quarter 1999 domestic tax expense which will be offset by 1999 operating losses of other domestic business units. MINORITY INTERESTS. Interests held by minority shareholders in the earnings of certain foreign subsidiaries were $0.4 million and $0.2 million for the three months ended June 30, 1999 and 1998, respectively. NET LOSS. Net loss increased by $11.5 million to $12.4 million for the three months ended June 30, 1999 compared to $0.9 million for the same period of 1998. This increase is due primarily to operating losses attributable to the Americas, Europe and Services, as previously discussed, in addition to increased interest expense. SIX MONTHS ENDED JUNE 30, 1999 VERSUS SIX MONTHS ENDED JUNE 30, 1998 REVENUES. The Company's revenues increased by approximately $24.2 million to $761.1 million for the six months ended June 30, 1999 from $736.9 million for the six months ended June 30, 1998. Contributing additional revenue of $27.8 million in the period was GLAS. In addition, the Asia/Pacific region revenues increased $35.7 million, due primarily to increased export volumes and new customers. These increases were offset by a decline in the Americas business unit of $19.0 million, due to lower domestic and international forwarding volumes as a result of a difficult freight forwarding environment and the effects in the first quarter of the Asian economic crisis. GNS revenues declined $5.7 million primarily due to lower volumes resulting 19 from customer industry consolidations. Europe's revenues declined $6.1 million primarily as a result of lower revenues in all modes and market softness throughout Europe. Services' revenues decreased $6.7 million, on lower volume in both project cargo and international relocation product lines as a result of declining international relocations and softness in the oil and gas industries. Had foreign exchange rates remained constant from 1998 to 1999, consolidated revenues would have been $2.2 million less than the actual 1999 results. NET REVENUES. Net revenues, which represent gross profit after deducting transportation and other direct costs, increased by approximately $4.4 million, to $186.8 million for the six months ended June 30, 1999 from $182.4 million for the same period in 1998. Net revenues as a percentage of revenues decreased to 24.5% in 1999 from 24.8% for the same period in 1998. This decrease in margins was primarily the result of reductions in Americas and Services, due to lower revenues as previously discussed, decreased net revenues in Europe due to softness in the region's economy and GeoLogistics Network Solutions lower revenues and decreased profit margins. The effect of the Air Services Acquisition and increased volumes in the Asia/Pacific region partially offset these increases. Had foreign exchange rates remained constant from 1998 to 1999, consolidated net revenues would have been $1.9 million less than 1999 actual results. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased by approximately $16.7 million, to $191.3 million for the six months ended June 30, 1999 from $174.6 million for the six months ended June 30, 1998. These expenses as a percentage of net revenues increased to 102.4% in 1999 from 95.7% for the same period in 1998 primarily as a result of a disproportionately higher decrease in net revenues in the Americas versus the $1.3 million increase in selling, general and administrative expenses for the six month period. Expenses in excess of net revenues in the Services business unit due to lower volumes also contributed to the increase. Selling, general and administrative expenses relating to GLAS amounted to $2.3 million of the increase from 1998. The remaining $13.1 million increase in expenses was due to higher expenses experienced in all other operating units. DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense increased $2.0 million for the six months ended June 30, 1999 compared to the prior year period primarily as the result of the Air Services Acquisition ($0.6 million) and an increase in fixed assets primarily related to information technology. 20 OPERATING LOSS. The Company recorded a $14.2 million operating loss for the six months ended June 30, 1999 compared to a $0.1 million operating profit for the six months ended June 30, 1998. Increased profits in Asia Pacific Region and GLAS were offset by higher operating losses in the Americas, GNS, Europe and the Services business units as previously discussed. INTEREST EXPENSE, NET. Interest expense, net, increased by approximately $3.8 million, to $11.1 million for the second quarter of 1999 from $7.3 million for the same period of 1998. The increase was associated with the issuance of the $15.0 million debt to finance the acquisition of GLAS in July 1998 and higher levels of working capital-related borrowings required as a result of the losses incurred at GNS, Services and the Americas operating units. INCOME TAX PROVISION. The income tax provision for the six months ended June 30, 1999 increased $3.2 million to a $1.0 million provision versus a $2.2 million tax benefit for the same period of 1998. No income tax benefit has been recorded for business units incurring operating losses in 1999. MINORITY INTERESTS. Interests held by minority shareholders in the earnings of certain foreign subsidiaries were $0.6 million and $0.4 million for the six months ended June 30, 1999 and 1998, respectively. NET LOSS. Net loss increased by $22.1 million to $27.4 million for the six months ended June 30, 1999 compared to $5.3 million for the same period of 1998. This increase is due primarily to operating losses attributable to the Americas, GNS, Europe and Services previously discussed interest expense and income taxes. LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 1999, net cash used by operating activities was $36.8 million versus $20.0 million in the first half of 1998. The increase was primarily due to a decrease in earnings results. Cash used in investing activities which related to capital expenditures was $6.1 million versus $13.8 million in 1998. Cash provided by financing activities was $40.4 million versus $20.4 million in 1998 and primarily consisted of additional borrowings under the U.S. revolving line of credit and by certain foreign subsidiaries. 21 On February 26, 1999, the Company executed an amendment to the existing bank credit facility (the "Amendment"). The Amendment includes revised financial covenants and additional collateral that were required due to the recent operating results of the Company. The Amendment (a) provides for an additional $30.5 million commitment ("Supplemental Commitment") by one of the Company's existing lenders (the "Supplemental Lender") to make loans, which will become due and payable on December 31, 2002 (subject to extension of the maturity date), and to issue letters of credit, (b) requires the obligors under the Credit Facility to grant a security interest in all of their personal property, including all trademarks and other intangibles, to the extent not already included in the collateral, and one item of real property to secure the loans under the Credit Facility, (c) amends the EBITDA and interest charge coverage ratio covenants for the period from and after December 31, 1998 to and including December 31, 1999, (d) increases the restrictions regarding the making of investments and acquisitions and prohibits the payment of management fees by the Company and certain of its subsidiaries prior to the date following June 30, 1999 on which the Company is in compliance with the original EBITDA and the interest charge coverage ratio covenants or, in the case of the management fees, the earlier satisfaction of certain other tests, and (e) increases the margins applicable to Eurodollar and base rate loans based on specified funded debt ratios. The Company applied approximately $15.0 million of borrowings under the Amendment to repay indebtedness incurred to finance the Air Services Acquisition. Because of the undetermined impact of the restructuring of certain of the companies businesses, and because of the uncertainties surrounding earnings-performance, the Company may have to seek again to amend those covenants or other covenants in the credit facility. Within North America, the Company has utilized borrowings under its credit facilities to meet working capital requirements and to fund capital expenditures principally related to information technology. At July 31, 1999, the Company had a working capital borrowing base under its credit facility of $100.0 million, $80.5 million of outstanding working capital related borrowings and $5.5 million of outstanding letter of credit commitments, leaving $14.0 of additional borrowing capacity comprised of $6.8 million in North America and $7.2 million in the UK. In addition, at July 31, 1999, the Company had a total outstanding of $30.5 million on the Supplemental Commitment, consisting of $5.1 million of letter of credit commitments and $25.4 million of debt. The Company incurred $13.8 million of working capital borrowings to finance operations in the first six months of 1999. 22 The Company's credit agreement and the indenture related to the Senior Notes contain certain restrictive covenants. These restrictive covenants, as amended, include covenants related to the maintenance of EBITDA and interest charge coverage ratios, limitations on indebtedness, limitations on restricted payments including dividends, limitations on sales of assets and subsidiary stock, limitations on transactions with affiliates, provisions relating to changes of control, limitations on liens, sale or issuance of capital stock of restricted subsidiaries, sale/leaseback transactions, and restrictions on mergers, consolidation and sales of assets. Total borrowings of foreign operations at June 30, 1999 were approximately $22.1 million, representing a combination of short and long-term borrowings and capital leases. Funding requirements have historically been satisfied by cash generated from operations and borrowings under various bank credit facilities. Under the Company's existing credit facility, a certain amount of borrowing capacity is based upon the level of accounts receivable in the United Kingdom. The indenture relating to the Company's Senior Notes generally provides that, subject to certain exceptions, the Company may not incur indebtedness unless on the date of such incurrence the consolidated coverage ratio of the Company exceeds 2.25 to 1.0 and that the restricted subsidiaries of the Company may not incur indebtedness unless on the date of such incurrence the consolidated coverage ratio of the Company exceeds 2.5 to 1.0. The indenture permits the Company to incur up to $115 million of total indebtedness; $100.0 million of indebtedness pursuant to its credit facility and $15.0 million of other indebtedness notwithstanding the Company's inability to meet the consolidated coverage ratio test. As of July 31, 1999, the Company had incurred $98.7 million of indebtedness under its Credit Facility and, as of such date, the Company would have been able to incur an additional $1.3 million of indebtedness pursuant to the terms of such facility. As of July 31, 1999, the Company had incurred $11.7 million of Other Indebtedness and would have been able to incur an additional $3.3 million of additional debt in this classification. In addition, the indenture permits the Company to incur up to $30.0 million under its foreign credit facilities notwithstanding the Company's inability to meet the consolidated coverage ratio test. As of June 30, 1999, the Company had incurred $22.1 million of indebtedness under its foreign credit facilities and as of such date, would have been able to incur an additional $7.9 million of indebtedness under such facilities in compliance with the terms of the indenture. 23 The Company is highly leveraged and has significant interest expense obligations under the Credit Facility and Senior Notes. Furthermore, the indenture and the Credit Facility contain numerous other financial and operating covenants. The ability of the Company to comply with such covenants will be dependent upon the Company's future performance, which is subject to financial, economic, competitive, regulatory and other factors affecting the Company and its subsidiaries, many of which are beyond their control. In addition, the Company has recently financed operations from borrowing under its credit facilities. The Company's ability to borrow additional funds is significantly restricted because the Company's borrowing capacity under its existing credit facilities is limited to $14.0 million as of July 31, 1999. If the Company is unable to improve operations at the Americas unit or otherwise generate sufficient cash flow, it could be required to adopt one or more alternatives, such as reducing or delaying planned expansions or capital expenditures, selling or leasing assets, restructuring debt or obtaining additional debt or equity capital. On February 26, 1999 certain shareholders and their affiliates provided $15.5 million of additional credit support to the Company through the provision of letters of credit to the Supplemental Lender pursuant to the Amendment. The Company has entered into an agreement to sell substantially all of the assets of GLAS and will use the proceeds of the sale to reduce outstanding debt. The Company will continue to investigate strategic alternatives to finance future operations, including the sale of other non-core assets. There can be no assurance that the sale of the GLAS assets will be consummated or that any of these alternatives could be effected on satisfactory terms, and any resort to alternative sources of funds could impair the Company's competitive position. YEAR 2000 The Company is currently engaged in a comprehensive project to upgrade its information technology including hardware and software that will consistently and properly recognize the Year 2000 ("Year 2000 Plan"). As a provider of global logistics and transportation services, the Company is reliant on its computer systems and applications to conduct its business. In addition to these systems, the Company is also reliant upon the system capabilities of its business partners. Many of the Company's systems include new hardware and packaged software recently purchased from large vendors who have represented that these systems are already Year 2000 compliant. As a result, a majority of the Company's financial systems are already in compliance with the Company's objectives and all computing hardware of the Company is Year 2000 compliant. An extensive review has also been made of all remaining internal systems. All of the operational systems in Europe, Asia and the United States are in compliance, with Canada 24 expected to be compliant in September 1999. Financial systems in all of Asia, all of Europe, except Italy, and the United States are also in compliance. The financial systems for Italy and Canada are expected to be compliant by October 1999. As part of this process the Company is also surveying embedded systems to ensure Year 2000 compliance with scheduled completion by December 1999. The Company has conducted a survey of its business partners most of whom have certified Year 2000 compliance. The Company, however, is still gathering information from the airlines. The Company is also working with major customers to gain Year 2000 certification with them in response to customer inquiries and surveys. The Company estimates total costs of the compliance process to be approximately $1.1 million of which $0.9 million has been spent through July 31, 1999. This does not include the costs associated with the Company's strategic information plan much of which addresses the Year 2000 project as well as strategic initiatives. The Year 2000 Plan prepared by the Company has been designed to identify points of failure and corrective actions to avoid systems failures. Procedures have been designed and systems implemented to prevent invalid dates from customers and suppliers from impacting Company systems. The Company believes the risk of operational failure from internal systems is minimal. The Company also believes that there are sufficient transportation providers who can meet the Company's contractual commitments even if some carriers are impaired by the Year 2000 problem. For those parties for which the Company has identified to be non-Year 2000 compliant, the Company intends to secure alternate carriers who are Year 2000 ready in order to continue to provide basic business services. The Company has already prepared manual operational procedures which are in place should disruption from a Company system or third party system occur. In addition, all system development will be stopped and all technical resources will be available for any unexpected system problems during the first quarter of 2000. CONVERSION TO THE EURO CURRENCY In January 1999 certain member countries of the European Union established fixed conversion rates between their existing currencies and the European Union's common currency 25 ("Euro"). The Company conducts business in member countries. The transition period for the introduction of the Euro will be between January 1, 1999 and June 30, 2002. The Company is addressing the issues involved with the introduction of the Euro. The more important issues facing the Company include: converting information technology systems; reassessing currency risk; negotiating and amending contracts; and processing tax and accounting records. Based upon progress to date the Company believes that use of the Euro will not have a significant impact on the manner in which it conducts its business affairs and processes its business and accounting records. Accordingly, conversion to the Euro is not expected to have a material effect on the Company's financial condition or results of operations. RISK MANAGEMENT AND MARKET RISK SENSITIVE INSTRUMENTS The Company is exposed to certain market risks, including changes in interest rates and currency exchange rates. In the normal course of business, the Company employs established policies and procedures to manage its exposure to changes in interest rates and fluctuations in the value of foreign currencies using a variety of financial instruments. In order to mitigate the impact on fluctuations in the general level of interest rates, the Company generally maintains a large portion of its debt as fixed rate in nature by borrowing on a long term basis. The Company's objectives in managing the exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility associated with foreign exchange rate changes and allow management to focus its attention on its core business issues and challenges. Accordingly, the Company enters into various contracts which change in value as foreign exchange rates change to minimize the impact of currency movements on certain existing commitments and anticipated foreign earnings. The Company may use a combination of financial instruments to manage these risks, including forward contact or option related instruments. It is the Company's policy to enter into foreign currency transactions only to the extent considered necessary to meet its objectives as stated above. The Company does not enter into foreign currency transactions for speculative purposes. 26 OTHER MATTERS In June 1998, the Financial Accounting Standards Board Issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), which was originally required to be adopted in years beginning after June 15, 1999. This new accounting standard will require that all derivatives be recorded on the balance sheet at fair value. If the derivative is a hedge, depending on the nature of the hedge, changes in fair value of the derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Management is currently assessing the impact that the adoption of SFAS No. 133 will have on the Company's financial position, results of operations, and cash flows. The FASB recently issued Statement No. 137 which delays the effective date of this Statement until fiscal years beginning after June 15, 2000. In addition, the Statement requires that all derivatives that are expected to be hedges must be designated as such on the first day of the period in which the statement becomes effective. The Company, which utilizes fundamental derivatives to hedge changes in interest rates and foreign currencies, expects to adopt SFAS No. 133 effective January 1, 2001. 27 PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 Financial Data Schedule (Filed electronically only). (b) Reports on Form 8-K On August 11, 1999 the Company filed a current report on Form 8-K disclosing a press release issued on August 6, 1999 regarding the sale of its GeoLogistics Air Services, Inc. business unit to FDX Global Logistics, Inc. 28 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, thereunto duly authorized. GEOLOGISTICS CORPORATION Date: August 16, 1999 By: /s/ Roger E. Payton --------------- ----------------------------------- Roger E. Payton President, Chief Executive Officer and Director Date: August 16, 1999 By: /s/ Miles Stover -------------- ----------------------------------- Miles Stover Chief Financial Officer 29