FEDEX REMOVES THE "KINKO's" WITH A $891Million WRITE-OFF

[Anonymous]

http://www.cfo.com/article.cfm/11484620/c_11485705?f=home_todayinfinance
FedEx Removes the “Kinko’s” with a Write-off
Changing
the brand it acquired in 2004, to FedEx Office, is part of a Q4 charge
of $515m for trade-name impairment and $367m for goodwill.
June,
2008FedEx Corp.’s decision to dispense with the Kinko’s brand —
changing store names to FedEx Office — involved the company taking a
$515-million noncash impairment charge for the acquired trade name, and
$367 million for goodwill.In its 8-k filing with the Securities and
Exchange Commission, the document and business services company
attributed another $9 million of the charge to “other,” for a pretax
total of about $891 million. It said that the total fourth-quarter,
one-time charge after tax would be $696 million.

FedEx explained
that 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,” Brian D.
Philips, president and CEO of FedEx Office, said in a press release.
“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.” The company added that will rebrand the
centers during the next several years.The charge, approved by the board
after recommendation of the audit committee, was made in connection
with annual impairment testing of goodwill and other intangible assets
conducted in the fourth quarter under Statement of Financial Accounting
Standards No. 142, “Goodwill and Other Intangible Assets.”FedEx
previously had decided to reduce the rate of long-term expansion of
FedEx Kinko’s retail network. The unit’s senior management team also
was reduced and restructured to reflect the new plan and cost-control
efforts, with future capital commitments slowing the expansion rate
from about 300 locations a year to 70. FedEx’s filing added that it
does not expect to be required to make any current or future cash
expenditures as a result of the impairment.

[Author]

June 5, 2008 at 11:29 AM