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

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

 user 2008-06-05 at 11:29:20 am Views: 94
  • #20233

    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.