BUSINESS WIRE--FedEx Corporation (NYSE: FDX) today (June 2, 2008) announced it will change the name of FedEx Kinko’s, the world's leading provider of document solutions and business services, to FedEx Office.
Along with the strategic decision to minimize the use of the Kinko’s trade name, FedEx said it will record a charge of approximately $891 million ($696 million, net of tax, or $2.22 per diluted share) in its fiscal fourth quarter, which ended May 31. This charge relates predominately to one-time, non-cash impairment charges associated with the decision about the use of the Kinko’s trade name and goodwill resulting from the Kinko’s acquisition.
The components of the charge are as follows (in millions):
The charge was not included in the latest earnings guidance, issued on May 9. FedEx will announce earnings results on June 18 for the fourth quarter and fiscal year 2008.
The FedEx Office name better describes the wide range of services available at its retail centers and takes full advantage of the FedEx brand — long recognized for excellent customer service, quality and reliability. The centers will be rebranded during the next several years. The goodwill impairment charge reflects a decline in the current fair value of the FedEx Office unit in light of current economic conditions, the unit’s recent and forecasted performance and the decision to reduce the rate of store expansion.
“Kinko's was primarily a copy and print-service provider when it was acquired in 2004," said Brian D. Philips, president and chief executive officer of FedEx Office. "The name FedEx Office more accurately represents our broader role of providing superior information and services through our company-owned, digitally connected locations around the world. We are a back office for small businesses and a branch office for medium to large businesses and mobile professionals."
In May, Philips was named president and chief executive officer of FedEx Office. The unit’s senior management team was reduced and restructured to better support execution of the company’s strategy and to control costs. Earlier this year, the company reduced future capital commitments by slowing the rate of expansion from about 300 locations in fiscal year 2008 to about 70 in fiscal 2009.
These changes at FedEx Office are the latest in a series of moves designed to more sharply focus the division on profitable core revenue growth and incremental shipping volume, which contributes about $1 billion of revenues annually to FedEx Express and FedEx Ground.
In another action today, the FedEx Board of Directors declared a quarterly cash dividend of $0.11 per share on FedEx Corporation common stock, an increase of $0.01, or 10 percent, per share over the previous dividend payment. The dividend is payable July 1, 2008 to stockholders of record at the close of business on June 13, 2008.